The Circular Economy

Schermafbeelding 2015-04-11 om 11.46.46
You already know what this is or is it totally new for you? The circular economy. In my opinion the ‘new’ sustainability. We all know about the need for us to be more sustainable. With our current consumption pattern we would need 3 times our earth to provide enough food for our demand in 2050! That’s crazy and, not unimportant, impossible! Wanna know more? Read on 😉 

As wealth rises and the world population increases, so does our energy demand. In 2100 we will demand 8x more energy than we are doing already and currently 93% of our energy demand is generated with fossil fuels and only 7% with for example wind or solar power.

Sustainability: great, but sufficient?

Sustainability is required and some core themes are increasing efficiency, reduction of consumption and emissions, and using more renewable resources. This is an approach to improve the take-make-waste system that currently dominates our way of living, the linear economy. Of course these ‘sustainable’ measures are needed to reduce the negative impact that we have on the environment and it will slow down the decay that the earth is experiencing as we speak. So yay: we can use our earth a bit longer. But someday oil, coal, and other fossil fuels will be gone, and the CO2 will be in our atmosphere, exceeding the maximum 2 degrees celcius temperature increase that we can handle. Yay, but nay… So what is a solution for this. How can we turn our negative impact into a positive impact? By stop extracting and using input as output again.

That’s what the Circular Economy is about. In a circular economy you reuse waste. One simple example is recycling. In recycling we see currently down cycling going on (what happens a lot with thermoplasts for example) which reduces the quality of the material. We need to change this into up-cycling our waste: increasing the value and quality.

Circular World Concrete Examples

I would like to give you some concrete examples of what you can think of in a circular economy.. As I told you recycling (up cycling!)  is an important aspect and companies using each others waste streams or (dirty) water as input again.  And what about this. Think about our computers and mobile phones. When your phone breaks down  the company will give you a new one instead of repairing your old one, which will become waste. This is cheaper for them than repairing a tiny component. That’s a bit odd and needs to change. Think about all the jobs that would be created this way- a whole new repairing/remanufacturing industry!

And what about that drill in your garage? You maybe use it, 3 or 4 times per year? It can be a pretty expensive tool and yet everyone has one. Wouldn’t it be great if more people would be able to use the same drill – a sharing economy – and together raise the utilization rate of that tool? Less drills necessary – less waste – and it brings new business opportunities for companies as well. For example renting systems might increase their revenue from a single drill while reducing costs for individual consumers. Now a drill is a small good, but what about your washing machine. You buy it, use it for 10-15 years and then it will be waste. It would be great if the company you bought it from would take the washing machine back and remanufacture it so it becomes valuable again and ready for use another 10-15 years. These are just some simple examples of things that need to change… And you know what: a lot is technically possible, but the first investments, adjustments to current systems, and to little knowledge about the subject are some of the barriers companies are facing.

A business view

As an individual consumer it might be a bit harder to have a significant impact already. But for companies the circular economy has mayor business opportunities. A study by the Ellen Macarthur Foundation (a leading foundation regarding the circular economy) has shown that in adopting a circular economy there is 700 billion US$ of value to be obtained from consumer goods material savings only. Next to improving the environment this is worth mentioning, right?! So how is this value created? A study by Accenture shows that value creation in a circular economy can come in four ways: Increasing products life cycles (being able to use the same product for a longer period of time), Lasting resources (speaks for itself, right?), Linked Value Chains (using output as input again) and Liquid markets (increase the amount of customers that can use the same product). If you’re interested in reading more about it I suggest you to read their research booklet (see my references), but I think I can already make my point:

  • We need a circular economy
  • We have the technical capability
  • We need a shift from linear to circular business models
  • Which leads us to new value opportunities and actually improving the environment and welfare!

Spread the word! Join the circular movement!

References:

http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Circular-Advantage-Innovative-Business-Models-Technologies-Value-Growth.pdf

http://www.groenerekenkamer.nl/grkfiles/images/Energievisie2050.pdf

http://www.ellenmacarthurfoundation.org

*this post has been published already on my previous blog justatoms.wordpress.com

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