Definition:

Circular economy

Our planet’s emerging resource problem is in need of a sustainable, practical, and long-lasting solution. Reserves of key resources are diminishing and the presence of waste in our ecological surroundings is taking massive forms. The prime concern of policymakers, researchers, and scientists is to develop an industrial system with a shift from the use of fossil fuels to the use of renewable energy. A few scientists and thinkers opted to move away from a linear-shaped economy to a closed-loop economy. The system should work like a living or organic system; processing nutrients that can be given back to the cycle.

Circular economy: A definition

A circular economy, or closed-loop economy, is a restorative and regenerative industrial system designed to minimize waste production and maximize resource efficiency and ecological sustainability. The focus is on decoupling economic growth from resource consumption. At a macro level, it is aimed at bringing harmony between the industrial economy and the environment. At a micro level, it is focused on the identification and analysis of eco-industrial alternatives that reduce resource and energy usage and minimize or eliminate waste. So an industrial economy without producing waste and pollution, by design or intention.

How does a circular economy work?

Central to the success of this closed-loop economy is the cradle to cradle philosophy. This philosophy considers all material in the industrial process to be either technical or biological nutrients. Technical nutrients are inorganic materials that have no negative effect on the environment and can be re-used in a continuous cycle by the industrial system. Biological nutrients are organic materials that can be discarded in the natural surroundings and are not harmful to the ecological system.

Besides changes in the materials used by the industry, it is important to make it logistically and economically attractive for companies to engage in this circular industrial model. The product-service system is an example of a combination between enhancing the ecological footprint while improving customer service levels. It is a move away from mass-standardized production to a lease system whereby companies engage in a long term commitment to their clients. Companies will be more willing to repair products and offer better quality because of the long term commitment. Hereby prolonging the lifecycle of a product and minimizing waste, while maximizing service and profits.

Why does it work?

This economy model is in its essence a symbiosis between business and science. First, there are obvious ecological and health benefits. The use of non-harmful materials and the closed-loop system minimizes or even eliminates waste and pollution. Secondly, there are economic benefits. The product-service system results in lower financial costs and a positive economic impact on business and customer service levels. Innovative materials are used to make desirable products that people want and can afford.