What is Circular Economy?

As far as buzzwords go, “Circular Economy” has certainly been thrown around a lot recently. The most current household example being, ALDI’s commitment to “stimulate an Australian circular economy” by including 30% recycled materials in their plastic packaging. There has also been increasing concern over the water scarcity crisis we imminently face, with many suggesting the circular economy model is the only hope for a solution.

But what is a circular economy? Well, in order to understand it, we must first understand the issues with our current model: the Linear Economy.

The Problem: A Linear Economy

Society’s current economic model – the Linear model – is characterised by the disposal of products made from extracted materials after a single or a limited number of uses, enabled by the easy and cheap access to raw resources.

Source: Sydney Environment Institute, 2018

In this Linear Economy the ‘take-make-dispose’ principle is given clear precedence. However, this economic model is facing difficulties in addressing current growing challenges. Resource depletion, climate change and waste over-production are all problems becoming increasingly urgent to tackle. Viewing used products as unsellable waste overlooks opportunities for value creation through the materials and labour embedded in these products, while at the same time giving rise to negative externalities[1].

The Solution: Moving to a Circular Economy

The circular economy model aims to maintain all resources at their highest value and has been rising in popularity as an alternative model to our current linear one. This model seeks to optimise the production and use of resources while minimising, and eventually nullifying, the amount of waste produced.

An important notion to have in mind when talking about the circular economy is the notion of the product life cycle. This is the product life phases, from materials procurement through to product end-of-life. In a circular economy, the owner of a product seeks to extend its product life cycle use phase by means of good design, maintenance or repair. This allows the product value to stay at its highest, as the product’s embedded labour and energy are preserved. Similarly, a good design combined with adequate reuse or recycling processes will allow the product or its materials to cycle the most, staying inside the economy loop for as long as possible.

The Ellen MacArthur foundation differentiates two material flow types within a circular economy: the biological and the technical cycles. The biological cycle includes the organic resources that are consumed and regenerated in the environment safely. Composting of food waste is an example of a biological cycle. The technical cycle involves finite materials management. Materials are used as opposed to consumed, and are then recovered through maintenance, reuse or recycling.

Source: Ellen MacArthur Foundation Infographic

Staying at the Top of the Waste Hierarchy

A popular tool that helps evaluating processes to protect the environment in the area of waste management is the Waste Hierarchy. This diagram, present in the European’s Waste Framework Directive (2008) and Australia’s National Waste Policy (2018), shows the preferable processes regarding waste management. It shows that we are all responsible for waste management. For example, we can avoid purchasing products with excessive or unnecessary packaging (bananas don’t need plastic bags!). 

However, governments, businesses and industries are critical for making the changes necessary to implement the circular economy.

But I Recycle each week so isn’t that a Circular Economy?

The short answer is no. Yes, some basic processes associated with circular economy have already been established in our current economic model. For example, the recycling of materials such as metals or household waste was initiated decades ago. However, we often don’t think about ‘more preferable’ options, as illustrated in the waste hierarchy, such as repair or reuse. This can be due to a lack of knowledge, time, financial resources or even potential solutions. In addition, these current processes are not efficiently spread to all industries and most of the time they do not account for the value of materials in their next life cycle. Hence, whilst we may slowly be on our way to a circular economy, we still have a long way to go.

Often, we recycle in an Open Loop rather than a Closed Loop…

We rarely distinguish between closed loop recycling and open loop recycling. Closed loop recycling refers to a recycling process that protects a material quality and functionality. In other words, a closed loop recycling process theoretically allows infinite recycling of a material. Aluminium can recycling fits in this category as they can be recycled back to aluminium. Thus,  closed loop recycling is where the recycled material retains its quality and function and very few material wastes are produced.

On the other hand, open loop recycling involves the loss of a material quality. Due to this loss in quality, open loop recycling processes are also referred to as downcycling. Typically, the material is recycled into another product of lower material quality, resulting in waste production from this process. It’s a way of delaying disposal by increasing the number of life cycles of a product or a portion of it.  An example of an open-loop recycling process is the conversion of plastic bottles to polyester, then used as textile. During the recycling process, the quality of the material decreases, involving a lower value product, leading to the disposal of the material after one or a few cycles. However, let’s keep in mind that open loop recycling can be an interesting solution in certain situations, especially in cases where the demand of the material created after the recycling process is high and would otherwise involve the use of raw materials. A much better alternative than direct landfill.

So, where does this leave us?

There are currently lots of initiatives and organisations in the pursuit of transforming society into a circular economy. The SMART-Plant project  is an excellent example, where the leftover products from wastewater streams can be converted into agricultural or industrial products, such as biobased fertilisers and even using recycled toilet paper to build cycle paths in Holland. However, this is a two-way street. Consumers need to change their habits to encourage producers to enact a circular economy. Australia is the second-largest consumer of textiles, so rejecting fast fashion and switching to sustainable fashion choices is an easy alternative that many of us can do right now.

So be conscious, expect more and together we can build a circular economy.

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[1]          Externalities: An externality is an economic term referring to a cost or benefit incurred or received by a third party. However, the third party has no control over the creation of that cost or benefit. (Investopedia)