CIRCULAR ECONOMY: PRINCIPLES, AGREEMENTS, INDUSTRIES, BUSINESS MODELS - ENVIRONMENT - 2025

The circular economy is a paradigm that promotes the cyclical flow of extraction, transformation, distribution, use and recovery of materials and energy from products and services. The term was coined by economists David Pearce and Kerry Turner in the 1990s.

This proposal aims to generate economic prosperity, protect the environment and prevent pollution, promoting sustainable development. To achieve this, it seeks to reduce the input of raw material and the output of waste, closing economic and ecological flows in loops.

The basic principles of the circular economy are preserving and enhancing natural capital, optimizing the performance of resources and promoting the efficiency of systems. For this, six main actions are proposed which are R egenerate (regenerate), S hare (share), O ptimise (optimize), L oop (establish loops), V irtualise (virtualize) and E xchange (exchange).

Among the advances at the international level to promote the paradigm of the circular economy, those of the European Union stand out. For this, it promoted the “Circular Economy Strategy” (2015) that encompasses a series of policies to guide its member countries towards this paradigm.

Globally, more and more companies adopt strategies based on the principles of the circular economy. For example, the company Recompute makes the casing of its computers with recycled cardboard.

The circular economy implies the possibility of new business models based on the value that the product or its materials retain after use. Among these is the "product service system" that provides the service that the product provides without transferring ownership.

In the Hispanic world, examples of circular economy are beginning to be appreciated, particularly in Spain where numerous initiatives of this paradigm are promoted. Thus, the Cotec foundation headed by King Felipe VI as honorary president has been promoting various proposals.

In Latin America, the development of the circular economy shows clear signs of progress. In Colombia, President Duque officially launched the National Circular Economy Strategy in June 2019.

For its part, in Mexico the Circular Economy Club (CEC) held the Circular Economy Mapping Week in March 2018. While in Argentina the Environmental Protection Agency promotes the program "Buenos Aires Produces Cleaner" to promote the change towards an economy circular.

Process

The circular economy describes a cyclical process in the dynamics of energy and materials during its value chain that is structured in the following components.

Use of renewable energies and changes in raw material requirements

Wind power. Source: Kenueone

The only possible way for the economy of goods and services to be able to close in a cycle is to sustain itself on the basis of renewable energy, eliminating dependencies on fossil fuels.

This drastic change in the world economic model would only be possible with a change in life models and consumption patterns, especially in developed countries.

In addition, the circular economy implies a decrease in the requirements of raw materials due to the change in the patterns of use of goods and services and their remanufacturing.

The production processes are based on non-toxic biological materials so that at the end of the cycle they can return to nature after composting or treating with other biological processes.

Synthetic materials such as polymers and alloys must be used in such a way that they can be reincorporated into the circular production process when they are recovered and reused, with the minimum use of energy and the highest quality.

Design, manufacture and production

The design of the products is carried out anticipating the disassembly, reuse and cycling of biological and technical materials, guaranteeing that the materials are devalued as little as possible so that they can be reinserted into the production process, anticipating a second life of the product.

The design is in favor of durability and upgrade, eliminating nefarious strategies such as planned obsolescence. Likewise, it promotes the performance and efficiency of the product.

The manufacture and production of goods and services are based on good practices and ecological technologies in order that the production process does not generate energy losses or waste, being as sustainable as possible.

Distribution and commercialization

In a circular economy, the distances between the place of manufacture and the place of sale are minimized, prioritizing local or national products. The reduction of energy and materials in the packaging is guaranteed and practices such as reverse logistics are used.

The latter is based on the recovery of containers, packaging, waste and hazardous waste for reuse, remanufacturing, recycling or final disposal.

The marketing of goods and services must reflect the real prices of the products, without externalization of social and environmental costs.

Consumption, use, repair and reuse

Equipment reparation. Source: www.pixabay.com

The change in current consumption patterns is a necessary condition for moving towards a real circular economy. These should turn towards consumption models based on real needs, more collective, based on the acquisition of services through the loan, exchange, barter, exchange and rental of goods and services, to reduce underutilized products.

Proper repair and maintenance of goods and services increases their useful life. This avoids the need to use more materials, energy and labor to generate a new product or component.

When a product can no longer be repaired, its components can be reused or remanufactured. In this way, value is better preserved than through direct recycling of materials.

The reuse of products and their parts must be approached with a diversified strategy throughout the value chain. As an example you can put cotton clothing:

• It can be reused as second hand clothing.
• Later it can be used as fiber filling in furniture.
• This can be used to insulate rock wool for construction.
• Lastly, cotton fibers can be safely returned to the environment.

This waterfall vision saves energy and pure raw materials at every step.

Redesign and remanufacturing

Redesign and remanufacturing allow an object or material that has already reached its useful life (according to linear economy), to be converted into another of equal or greater value.

These practices reduce the demand for new products and the pressure on raw materials. For example, nylon can be made from industrial waste for use in the textile industry.

Recovery and recycling

Source: Jakub T. Jankiewicz (jcubic / kuba)

In the circular economy, final waste is recovered to be incorporated into the biosphere through composting or anaerobic digestion (biological waste), or to be reinserted into the industrial process (technical waste).

characteristics

Linear economy vs circular economy. Source: Catherine Weetman

The sustainability

The fundamental basis of the circular economy is sustainable development, therefore a balance must be sought between the economic, the social and the environmental. In this sense, companies should try to make a more efficient and responsible use of biological and technical resources.

Likewise, environmental criteria must be considered when selecting materials and suppliers in order to reduce the impact on nature.

Technological practices must be focused to ensure that both the product or service and its process are carried out in the most sustainable way possible. For this, processes and practices must be improved, use clean energy and efficient consumption of raw materials.

On the other hand, ecodesign, eco-labels and monitoring of the process should be incorporated to reduce the environmental impact in each phase.

The Three R Principle: Reduce, Reuse, Recycle

Within the paradigm of the circular economy, the aim is to reduce inputs (including water and energy), emissions and waste. One way to reduce emissions to the atmosphere is the use of renewable energy sources.

Likewise, reusing products for the same purpose or for another application is essential to reduce waste production. This reuse can be achieved by repairing, repowering or reusing the components of the goods.

It also seeks to recycle both intermediate and final waste from the production process. For this, the production cycles must be designed so that the waste can be incorporated into other production cycles.

For example, in a food processing company the organic waste generated can be used for composting.

The closed loop

In 1966 Boulding proposed that the planet could function as a closed, ecological and cyclical system in order to recirculate limited resources and make them unlimited. This approach is fundamental to the circular economy so that products are designed to be recovered through biological or technical cycles.

On the other hand, waste can be recovered as a biological resource that can be returned to the biosphere. Another way is to incorporate them as a technical resource that can be reincorporated into an industrial process.

Biomimicry

The "biomimicry" consists of using nature as a model for the design and structure of products or services. For example, the Swiss Georges de Mestral invented velcro based on his observations of how the fruits of the thistle adhere to his clothes.

Maintain the value of products, components and materials in the economy

One of the goals of the circular economy is to reduce the use of raw materials. In this sense, it is necessary to address the problem of the useful life of products, their components and materials.

Therefore, processes that reduce planned obsolescence (design of products to have a limited useful life) should be promoted. In the framework of the circular economy, it seeks to extend the useful life of products while maintaining their value.

Principles of the circular economy

Taking into consideration the above elements, the principles of the circular economy have been synthesized in three statements:

Principle 1: Preserve and enhance natural capital

It seeks to protect and improve natural resources, maintaining control over the use of non-renewable ones. In addition, the reuse and substitution of raw materials is promoted to control and balance the reserves and flows of renewable natural resources.

For this, technologies and processes that use renewable resources or higher performance are used. Likewise, the flow of materials and renewable energies in the system is encouraged to achieve the maximum use of their value in each phase.

Principle 2: Optimize resource performance

It consists of maximizing the useful life of products, components and materials in all phases of the production cycle. For this, products must be designed so that they can be remanufactured, reconditioned and recycled.

Likewise, various production cycles must be combined so that the waste of one is the raw material of another and vice versa. At the biological level, it is promoted that organic components re-enter the biosphere safely and generate new raw materials.

Principle 3: Promote the effectiveness of systems

It seeks to detect and eliminate negative external factors from the design that reduce the efficiency of the system. Furthermore, possible damage to food, mobility, education, health and leisure should be avoided or at least reduced.

The RESOLVE framework

The Ellen MacArthur Foundation, dedicated to promoting the Circular Economy, suggests 6 actions that companies and governments can take to achieve this goal. These are Regenerate, Share, Optimize, Loop, Virtualize, and Exchange.

The RESOLVE framework (a term made up of the initials of the English words) summarizes the principles and strategies of the circular economy.

Most important international agreements

Madrid City Council (Spain) supports the Seville Declaration on the circular economy. Source: Madrid newspaper

The concept of circular economy has recently gained prominence on political agendas. For example, Germany was a pioneer in enacting the "Law on Waste Management and Closed Cycle of Substances" in 1996.

For their part, countries such as Japan and China have passed national laws that promote circular economy processes. In addition, by 2015 the European Union incorporated the concerns of the Circular Economy in the 2015 Circular Economy Strategy of the EU.

2015 EU Circular Economy Strategy

The package of measures formulated by the European Commission in December 2015 includes measures that cover the entire life cycle of products from the design and production phases. In addition, the stages of consumption and improvement of management of the waste generated are taken into account.

The Circulars

On the other hand, there is an international award that is awarded to people or companies that make notable contributions to the circular economy. The award is called The Circulars and is promoted by various institutions.

Among the bodies promoting the award are the World Economic Forum and the Young Global Leaders Forum in association with Accenture Strategy.

Industries embracing the circular economy

Worldwide, more and more companies are joining the circular economy route:

Caterpillar

This company is dedicated to the manufacture of industrial machinery and equipment and has a long history applying elements of the circular economy. Caterpillar specializes in so-called remanufacturing design for used parts.

The parts of the machinery are rebuilt several times guaranteeing the same quality standards. Later, these pieces are used to repair, replace or renew machinery.

Manzana

The company developed an iPhone mobile phone disassembling robot (named Liam) to be able to reuse parts. This robot is capable of dismantling a defective mobile in 11 seconds and separating the reusable components.

This system has saved about 1000 kg of gold, which otherwise would have been extracted from natural reserves. In this way, it has contributed to reducing the pollution associated with gold mining, which has a high environmental impact.

Recompute

The company Recompute builds desktop computers whose housings are made from reused cardboard. This is based on the “full life cycle design” approach that combines sustainable ideas throughout the product life cycle.

In this way a product is obtained that causes low possible impact and is easily reproducible. This desktop computer has a shell made of corrugated cardboard (recyclable and renewable) and its manufacturing processes have low impact.

Non-toxic reagents are used to assemble Recompute and electronic components are kept to a minimum. White glue is used during gluing and non-toxic flame retardant treatment is done and printing and assembly is electronic.

In the use phase, Recompute allows the connection of accessories that the user may have from previous machines. Finally, in the disposal phase, it can be disassembled to recover and recycle the electronic components and the housing separately.

New Light Technologies

The company developed a technology to capture the CO2 generated in grow houses or greenhouses. With this carbon a bioplastic (AirCarbon) is made with various applications and is a clear example of a circular economy.

In the growing houses, in addition to agricultural products, it is emitted as waste (CO2) that in this way is transformed into raw material for a second production cycle.

Impax

Impax first created and defined the 'Environmental Markets' classification system in 1998 and has continued to develop it ever since. It has identified 1,600 listed companies worldwide that offer environmental solutions.

These solutions include circular economy business models, food waste recovery and suppliers of reusable business logistics boxes.

Lehigh Technologies

This company uses resource recovery criteria and circular substitution models in its strategies. In this sense, waste tire raw material is obtained for the manufacture of new tires.

In addition, they produce an additive that is used in a wide range of industrial products, from tires to plastics to asphalt.

Lehigh Technologies has so far manufactured more than 500 million tires using its circular model. Today, seven of the top ten tire companies in the world currently use MRP.

Seiko Epson Corporation

It is a printer manufacturing company that has developed a compact papermaking system from recycled material. The EPSON Paper Lab system allows you to shred used paper and produce recycled sheets without using water in the process.

Circular economy business models

The circular economy promotes a business model that creates value based on the use of the economic value of products after use. Innovation in business models with this approach follows various paths that companies can apply alone or in combination:

1.- Allow customers to return the product after use, in order to extend its life cycle through after-sales or maintenance services.

2.- Promote the “Product service system” model, which means offering the use of goods through services. In this way, the property and management of the good is maintained by the producer or distributor of the service.

The key in the framework of the circular economy is to normalize the system at the enterprise level. Thus, there are companies that rent systems and machinery to others to carry out a certain job.

3.- Another approach is for organizations to interact in a network to share resources and revalue or reuse waste, as in ecological industrial eco-parks (industrial symbiosis). At the macro level, there can be initiatives developed in regional or national areas such as eco-cities, eco-municipalities or ecological provinces.

4.- Another model is reverse logistics or reverse cycle, which consists of reversing the common logistics process. In this case, the flow of products from the consumer to the origin is controlled.

This model opens up business possibilities around the recovery of products for return, repair, reuse or recycling.

Strategic areas

Among the areas that provide the greatest opportunities for the development of the circular economy is waste management and the management of water resources. Other aspects are power generation, building and urban environment, industry, agriculture and food, mobility and logistics and the environment.

Circular economy in Spain

COTEC

The Cotec Foundation represents one of the largest companies promoting the circular economy in Spain. It is a private non-profit organization whose mission is to promote innovation as an engine of economic and social development.

Cotec has about 90 patrons between private companies and administrations at the regional and local levels and King Felipe VI is the Honorary President.

Since 2001 there is also Cotec Italia and since 2003, Cotec Portugal, which gives an international character to the drive for innovation.

Ecoembes

Ecoembes has been focused on recycling containers for more than 20 years and has signed agreements with Autonomous Communities and Local Entities, in this way more than 47 million citizens have 383,974 yellow containers and 217,170 blue containers distributed throughout the Spanish geography.

In May 2017 Ecoembes founded TheCircularLab, the first innovation center in its field. In this laboratory all phases of the life cycle of containers are analyzed from reception, design and reintroduction to the consumption cycle.

ISLANDAP Project

This project is funded by the "Operational Program for Territorial Cooperation Interreg VA Spain-Portugal MAC (Madeira-Azores-Canarias) 2014-2020 (POMAC 2014-2020)". It is a territorial cooperation program whose objective is to achieve transnational cooperation and promote the sustainable development of the Atlantic area.

Numerous university institutions and research centers coordinated by the University of Las Palmas de Gran Canarias (Spain) participate in this initiative.

Circular economy in Colombia

Currently, Colombia is committed to developing an efficient economy that produces low carbon emissions and is sustainable. In this sense, the Colombian State established a green mission that has three goals by 2030:

1.- Increase efficiency in the use of water, energy, land and raw materials to achieve a circular economy.

2.- Position the bioeconomy as a competitive sector that diversifies the country's export offer.

4.- Increase the demand and supply of the workforce for green growth.

In June 2019, President Iván Duque officially launched the National Circular Economy Strategy, the first of its kind in Latin America.

Circular economy in Mexico

This country as a sign of its commitment to sustainable development held the Circular Economy Mapping Week in 2018. This event seeks to identify circular economy initiatives that the main Mexican companies and entrepreneurs.

In Mexico, there are organizations oriented to the development of Circular Economy approaches, including Valora Consultores and the Mexican Center for Industrial Ecology.

Rate Consultants

It defines itself as a global sustainability consulting company and works with multinational organizations to drive sustainable product strategies.

Mexican Center for Industrial Ecology

It is an organization whose goal is to help society, industries and governments achieve a decarbonization and dematerialization of the economy. He specializes in industrial ecology, social metabolism, and the circular economy.

Circular economy in Argentina

Argentina Environmental Protection Agency

On the road to sustainable development, the Argentine Environmental Protection Agency promotes the “Buenos Aires Produces Cleaner” program. This program promotes the maximum use of waste through recycling, reuse and recovery.

The approach is to create a framework intended to support the shift from a linear “use it and throw it away” economy to a circular economy. In this way, we seek efficiency in the use of resources and achieve a reduction in carbon emissions.

Recycled Connection

It is a platform aimed at promoting and disseminating circular economy concepts. In 2018, together with other organizations, it organized its 19th Technical Conference on the Circular Economy of Cardboard and Paper.

ProCEedS

This is the acronym for Promoting the Circular Economy in the Food Supply Chain. It is a research project framed in the Horizon 2020 - RISE call of the European Union.

This project will start in the last quarter of 2019 and will last for three years and has the objective of identifying and evaluating circular economy practices. Likewise, it seeks to detect obstacles to the implementation of this economic approach.

critics

Source: www.flickr.com

The paradigm of the circular economy has evolved from the concept of sustainable development and, as such, it carries criticism of it. Unlimited economic growth, implicit in the vision of development, is not possible on a planet with limits.

The implementation of the circular economy, mainly by large developed countries, could lead to a significant reduction in greenhouse gases and the pressure to exploit raw materials and fossil fuels.

However, a growing economy will not stop consuming resources, or fossil energy, no matter how much efforts are made to increase its efficiency and reuse.

The debate around sustainable development and its aspects focuses on questioning the vision of development, which implies rethinking the meaning of wealth, quality of life and prosperity.

The circular economy is being used to justify green market strategies. For example, The Coca-Cola Company presents itself as a defender of the circular economy, while it is well known that this multinational is among the most polluting companies in the world, recognized as a great predator of water and a generator of plastic waste.

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