What is circular economy?

A circular economy is an alternative to a traditional

linear economy (take, make, waste). It seeks to reduce
waste, recovers resources at the end of a product's life,
and channels them back into production, thus
significantly reducing pressure on the environment.
Three foundation principles to the circular economy?
“It sounds complicated, but the Circular Economy
is really based on three simple principles: designing out
waste and pollution, keeping products and materials in
use and regenerating natural systems.”
 Sustainable development requires disruptive changes in
the way our societies and businesses are organized. The
circular economy (CE) model offers a new chance of
innovation and integration between natural ecosystems,
businesses, our daily lives, and waste management. Find out
below the definition, meaning, principles, advantages, and
barriers to a circular economy model.
 Simple definition of circular economy
In the linear economy, raw natural resources are taken, transformed into
products and get disposed of. On the opposite, a circular economy model aims
to close the gap between the production and the natural ecosystems’ cycles –
on which humans ultimately depend upon.
This means, on one hand, eliminating waste – composting biodegradable
waste or, if it’s a transformed and non-biodegradable waste, reusing,
remanufacturing and finally recycling it. On the other hand, it also means
cutting off the use of chemical substances (a way to help regenerate natural
systems) and betting on renewable energy.
 The World economic forum’s definition of circular economy
“A circular economy is an industrial system that is restorative or
regenerative by intention and design. It replaces the end-of-life concept
with restoration, shifts towards the use of renewable energy, eliminates the
use of toxic chemicals, which impair reuse and return to the biosphere, and
aims for the elimination of waste through the superior design of materials,
products, systems and business models. ”
 The principles of the circular economy: Energy and resources are Gold
At its core, a circular economy model has the intention of designing out
waste. In fact, a circular economy is based on the idea that there is no such thing
as waste. In order to achieve this, products are designed to last (good quality
materials are used) and optimized for a cycle of disassembly and reuse that will
make it easier to handle and transform or renew them.
In the end, these tight product cycles differentiate the circular economy
model apart from disposal and recycling, where large amounts of embedded
energy and labor are lost. The ultimate goal is to preserve and enhance natural
capital by controlling finite stocks and balancing renewable resources flows.
 The principles of the circular economy: Following nature’s cycles and designs
The circular economy model makes a distinction between technical and biological
cycles. Consumption happens only in biological cycles, where biologically-based materials (such
as food, linen or cork) are designed to feed back into the system through processes like
anaerobic digestion and composting.
These cycles regenerate living systems, such as soil or the oceans, which provide
renewable resources for the economy. By their turn, technical cycles recover and restore
products (e.g. washing machines), components (e.g. motherboards), and materials (e.g.
limestone) through strategies like reuse, repair, remanufacture or recycling.
Ultimately, one of the purposes of the circular economy is to optimize resource yields
by circulating products, components, and the materials in use at the highest utility at all times
in both technical and biological cycles.
 The principles of the circular economy: All in with renewable energies
The last principle of a circular economy has to do with the fact that
the energy required to fuel this cycle should be renewable by nature, with
the purpose of decreasing resource dependence and increasing systems’
resilience. In this sense, this principle is about developing the systems’
effectiveness by revealing and designing out negative externalities.
 Economic barriers to a circular economy model
In our current economic system, there are some barriers to the implementation of a circular
economy model, such as:
1. Social and environmental externalities are not considered in prices, privileging financial
market signals instead of people and nature when economic decisions are made;
2. Prices of raw materials are fickle and at low prices alternative, good quality secondary
resources are not competitive;
3. Circular economy business models are harder to develop, as most investors are still working
under a linear economy logic and sometimes upfront investments are required;
4. The demand for circular products and alternatives is still small,
5. There aren’t still many qualified professionals with technical or ‘information and
communication technology’ (ICT) knowledge.
 Benefits Of The Circular Economy Model
Since the industrial revolution, humankind has been following a linear model of
production and consumption. Raw materials have been transformed into goods that are
afterward sold, used and turned into waste that has been many times unconsciously
discarded and managed.
On the opposite, the circular economy is an industrial model that is regenerative by
intention and design and aims to improve resources’ performance and fight the volatility that
climate change might bring to businesses. It has benefits that are operational as well as
strategic and brings together a huge potential for value creation within the economical,
business, environmental and societal spheres.
 Fewer Greenhouse Gas Emissions – Environmental Benefits Of The Circular Economy
One of the goals of the circular economy is to have a positive effect on the planet’s ecosystems and to
fight the excessive exploitation of natural resources. The circular economy has the potential to reduce
greenhouse gas emissions and the use of raw materials, optimize agricultural productivity and decrease the
negative externalities brought by the linear model. When it comes to reducing greenhouse gases, a circular
economy can be helpful:
Because it uses renewable energy that in the long run is less polluting than fossil fuels.
Thanks to reusing and dematerializing, fewer materials and production processes are needed to provide good
and functional products.
Because residues are seen as valuable and they are absorbed as much as possible in order to be reused
in the process.
Since the preferred choices will be energy-efficient and non-toxic materials and manufacturing and
recycling processes will be selected.
 Healthy And Resilient Soils – Environmental Benefits Of The Circular Economy
The principles of the circular economy on the farming system ensure that
important nutrients are returned to the soil through anaerobic processes or composting,
which softens the exploitation of land and natural ecosystems. In this way, as “waste” is
returned to the soil, besides having fewer residues to deal with, the soil gets healthier
and more resilient, allowing a greater balance in the ecosystems that surround it.
As well, since soil degradation costs an estimated US$40 billion annually
worldwide, and has hidden costs such as the increase of fertilizer use, loss of
biodiversity and loss of unique landscapes – a circular economy could prove to be really
useful for both the soils and the economy.