The Ellen MacArthur Foundation is responsible for coining the term: circular economy. However, this economic model was synthesised using different major schools of thought such as Cradle to Cradle design, natural capitalism, biomimicry and others. The foundation’s work is fully based around facilitating our transition to a circular economy.

So what is the circular economy?

As defined by the foundation, it is “an economy that is restorative and regenerative by design.” It promotes a model where materials function at their highest utility, therefore replacing the ‘take, make, dispose’ linear model of production. This requires extracting the maximum value from resources while they are in use, and then recovering and reusing them at the end of each service life.

The circular economy is based on three principles:

  • Design out waste and pollution: the circular economy designs out all negative waste from economic activities which impact human health and natural systems. Examples are greenhouse gases, and air, land and water pollution.
  • Keep products and materials in use: the circular economy preserves value from activities. This means designing for durability, reuse, remanufacturing, and recycling so that materials can continue circulating in the economy.
  • Regenerate natural systems: the circular economy preserves and enhances renewable resources, for instance using renewable energy instead of fossil fuels.

This butterfly diagram is really useful to see how these three principles can be upheld by the circular economy.

You can see that there are two distinct flows. The green illustrates biological components and the blue, technical ones.

In this case, biological refers to the materials in a product that can safely re-enter the natural world, after the “cascades” i.e. they can be used more than once, then will biodegrade over time and return their embedded nutrients to the environment.

On the other hand, the technical side is all about continuously cycling these materials through the system so that their value is able to be captured… and recaptured. These are materials that are unable to re-enter the environment, like metals and plastics.

You can also see that these biological and technical flows have two different functions. The biological materials go to consumers as these are seen as consumable. The technical materials go to users as these are intended for use. We consume food, however we use something like a car. This brings up the question: should we own products or simply use them (product as a service) and then share access to these products with others. This idea of ownership versus sharing is a very important underpinning for keeping products and materials in use for as long as possible.

Examples of businesses contributing to the circular economy

  • Furniture businesses, like Ahrend, that have modularity, disassembly and life extension as core design principles. Ahrend even  provides furniture as a service so that the technical materials can be brought back to the producer and reused for other customers. This is an example of goods to services, one key way of realising the circular economy and of lean production (making goods with lower material requirements since the materials are being reused)
  • Car companies, like Renault, that use materials from end-of-life vehicles to create new cars. Now, 36% of the total mass of a new Renault vehicle in Europe is made from recycled materials and they managed to make 8% of an end-of-life vehicle recyclable. This is an example of reducing waste in manufacturing and of lean production which helps cut costs by bringing back technical materials to the producers.

The benefits of the circular economy

Changing to a circular economy model can benefit the economy, the environment, businesses and individuals. The more productive use of inputs would drive costs down, helping economic growth. It would also reduce our greenhouse gas emissions and primary resource consumption, enhance land productivity, and improve soil health. For businesses, there would be demand for new services and they would benefit from increased profits. Lastly, individuals would have more disposable income due to reduced prices, there would be less obsolescence of products purchased, greater product benefits due to higher quality items, and improved overall health from better agricultural practices and reduced air pollution.