Transitioning to a circular economy: we need to change
Our economy has worked very well in its linear form. A material extraction rate of 84 billion tonnes per year (and growing) and few consequences of what happens with the 1.3 billion tonnes of waste produced annually has led to global GDP growth. But what if we can no longer operate like this, because resources are finite, ecological consequences of waste are major and there will be 9 billion people before we know it? We still need jobs and a healthy economy but, clearly, we need to change.
In a circular economy, resources are retained rather than quickly being discarded as waste. In 2018, with the progression to circular economy thinking, instead of talking about the ‘waste’ hierarchy; we should really be discussing the ‘materials retention’ hierarchy.
The current business landscape does not yet widely support models that encourage resource retention strategies. Too much ends up as waste – a problem rather than a resource. Circular economy concepts can only develop if they make business sense. Rental, leasing and servitisation, for example, generate income for companies while they retain ownership of the product itself. The economic benefits of product longevity become more significant to the product owner if the drive is to sell services, not products. Decisions about what to do at the end of a product’s life can be clearer when the product manufacturer or retailer still owns the product.
It’s becoming common to take used products back, but how to deal with the returned products depends on product and material value, ease of disassembly, levels of contamination and markets for components or recovered materials. Some businesses are already looking to increase use of secondary raw materials, minimise materials use, consider materials substitution and improve design for a circular economy.
Transitioning to circular economy business models will create change (new businesses will form, new partnerships will develop, new products will arise, new technologies will be used in efficient ways) and there will undoubtedly be winners and losers.
Business models themselves of course don’t necessarily lead to greater circularity: maybe old products are sold off before reaching end of life; leasing might encourage consumers to replace products more often than they otherwise would; the infrastructure or markets might not exist to recover value from a product, component or secondary material, whoever owns it.
For this reason, the H2020-funded project ECOBULK – which Oakdene Hollins is involved in – includes economic and environmental assessments of the products and concepts developed. Business cases will be tested, and results analysed to find whether or not the new business models support increased circularity. The ECOBULK consortium partners are of very different business sizes operating in three different sectors – a variety that will provide a wealth of information and opportunity to investigate the business cases and business model aspects of circular products.
For more information on ECOBULK, visit https://www.ecobulk.eu/news/the-ecobulk-vision/
For the full discussion on circular business models and how ECOBULK will tackle the issues involved, visit https://www.ecobulk.eu/news/circular-business-models/