Guide: The Circular Economy
Updated: Mar 1, 2022
Humanity poses a threat to the earth’s future. The current Western economic system and the way we consume is not sustainable. Earth’s natural resources are finite and in grave danger of running out. The circular economy model reimagines the way our society works and offers us the opportunity to separate raw finite material from economic growth.
Here’s a guide to the circular economy, how it works and how it differs from our current linear system.
The Linear Economy and why it's not working
In our current economic system, we mine the earth’s raw resources which we process, use, and then throw away. This system is known as the linear economy and follows the ‘take-make-waste’ step plan. Value is created by buying and selling as many products as possible.
A leading circular economist and the author of Doughnut Economics, Kate Raworth explains in her 2018 TedTalk that growth has become the overarching goal of our economy and that increasing GDP has become the end goal of policy making. We are financially and politically addicted to growth.
In the linear economy, Raworth maintains that growth has taken on a meaning outside of itself: it has become a measure of success. We even attach to it a sense of national pride. As a society we believe the narrative of transformation through the consumption of material goods.
"We are financially and politically addicted to growth."
However, our current economic model has rapidly destabilised the planet on which humanity’s well-being depends. This model is not, and has never been, sustainable. Western society promotes overproduction and overconsumption at the expense of the earth’s ecological and social systems.
Raworth asks how GDP can be a measure of success when poverty still pervades our society and ecological systems are rapidly destroyed at the hands of economic growth.
What is Doughnut Economics?
Doughnut economics, or the circular model, offers us the opportunity to no longer depend economically on earth’s raw materials. It is a holistic economic approach which takes into account different aspects of society and the environment, building economic, natural, and social capital.
It acknowledges that the answers to economic hardship, to the housing crisis, and to the environmental crisis do not have separate answers.
How does the Circular Economy work?
Launched in 2010, The Ellen McArthur Foundation developed and promotes the idea of a circular economy. It works with businesses, academia, policymakers, and institutions to mobilise system solutions. Furthermore, it is a great online resource to learn about how the circular economics works. You can watch a short, clear introductory video here.
A circular economy aims to redefine growth with a focus on positive society-wide benefits. It looks beyond the current ‘take-make-waste’ extractive industrial model to renewable energy resources. The circular model entails gradually decoupling economic activity from earth’s finite raw resources. The Ellen McArthur Foundation explains that this transition is underpinned by three core principles:
The circular economy model also distinguishes between technical and biological cycles. In this system, consumption only happens in biological cycles where food and biologically-based materials can feed back into the system through processes like composting. Technical cycles recover and restore products and materials through reuse, repair and recycling.
This is different from the linear economy where we dispose of materials which no longer work, or only reuse a part of a product for another application. This reduces the value of the material and makes it difficult to use again. In a linear economy, sustainability is focused on eco-efficiency. Ecological impact may be minimised, but we still achieve the same outputs of goods and services, so that growth is still the outcome.
The circular economy has a different perspective on sustainability. Its focus is on eco-effectiveness and conservation. It takes production processes into account and outlines how to reuse, repair, recycle, and even up-cycle products which then increases the value of a material over time.
A look at EU regulations
A 2020 case study conducted by the Ellen McArthur Foundation outlines the EU’s action plan for a circular economy. Working towards a carbon-neutral system, the world’s largest single market is transitioning to a circular economy. In 2015, the EU adopted a comprehensive circular economy package (CEP).
Between 2012 and 2016, there was a 6% rise in jobs related to the circular economy. The EU’s overall circularity rate (the percentage of recovered and recycled materials used in production) increased from 3.4% in 2004 to 11.7% in 2016. In 2017, circular activities created €155 billion in added value.
The case study affirms that the EU has progressively raised its level of ambition, so that “circularity is now considered a means to achieve the EU’s climate commitments and a just, sustainable, and socially fair transition”.
“Circularity is now considered a means to achieve the EU’s climate commitments and a just, sustainable, and socially fair transition" - EU Case Study
The UK economy after Brexit
Around 80% of the UK’s environmental laws have been set by the EU. In 2018, the CEP demanded that all plastic packaging must be recyclable by 2030. As the UK has left the EU before these targets have been met, you may be worried about a post-Brexit UK falling behind the standards of other European countries.
A 2019 Environment Journal article stated that it is highly likely that the UK will fall behind these targets if they are not converted into UK law. However, in an official UK statement published on 30th July 2020, the UK government stated that leaving the EU has not changed their “world leading ambitions on the environment, and [they] have no intention of weakening [their] current environmental protections after the end of the Transition Period”.
In December 2020, the Guardian reported on the Christmas Eve agreement. The article explains that under this current agreement, “if the UK fails to keep pace on EU levels of labour, social or environmental protection and this affects trade or investment, the EU could take proportionate measures in response, such as introducing tariffs”.
Despite this, the article reports concern over the protection of labour and environmental standards. According to Marley Morris (the IPPR’s associate director for immigration, trade and EU relations), the agreement offers surprisingly weak protections. It leaves considerable scope of the UK government to erode EU-derived standards over time.
Society’s fixation with economic growth is not sustainable. The exhausting individual pursuit of material goods is no longer viable. Each time we produce, consume and throw away a product, we eat into the earth’s finite resources and generate toxic waste.
The transition towards a circular economy means holding policymakers and businesses to account. It also means reassessing our own patterns of behaviour. The circular model promises to turn our waste into social and economic capital. It reimagines ownership so that non-biological products increase in value over time through restoration and reuse.
In order to protect the environment and respond to social issues, we must not only rethink what we consume, but we also need to reconsider the way in which we consume.
For more guides and resources, head to our dedicated Climate Crisis section.