THE CIRCULAR ECONOMY
WHAT IS IT?
Circularity is a new way to design, make and use goods and materials
The circular economy is an economic model that is restorative and regenerative by design. The circular economy stems from the realisation that Earth is a finite system constrained by planetary boundaries. Ultimately in nature the concept of waste does not exist – everything is transformed into a resource that can be utilised.
The circular economy aims to keep materials, components, and products in-use in the economy for as long as possible. In circularity, the key objective is to design consumption and production systems to create and retain value.
Circularity seeks to optimise every aspect of a product’s lifecycle, from raw material extraction to manufacturing and first use, and multiple use-lives thereafter; through product re-design, new business models and novel technologies and processes.
The global and European decarbonisation transition agenda has led to increased emphasis on promoting circular economy policies and initiatives at national and regional levels, and in many contexts, has been accompanied with an increased strengthening of statutory decarbonisation reuse/repair, recycling and waste reduction targets.
Embedding circular economy practices into production and consumption systems is fundamental to realising Ireland and Europe's shared ambition for a net-zero carbon and circular future. The 2019 introduction of the European Green Deal made a transition to the circular economy a necessity to making Europe the first climate-neutral continent by 2050. In 2021, the Government of Ireland followed suit by enacting its own Circular Economy Strategy and enshrining the Circular Economy Act in law in 2022. These significant policies solidify the circular economy as the foundation pillar of Ireland's climate and economic development agendas into the future.
Benefits of the Circular Economy
MACRO-ECONOMIC
Circular business models enable the decoupling of GDP from resource use and can deliver significant:
• Economic growth through value creation and cost savings
• Decarbonisation and resilience to resource price volatility
• Security of supply through the creation of secondary raw material markets
ENVIRONMENTAL
Circularity is a key to decarbonisation and contributes to UN SDGs and ESG. Key environmental benefits include:
• Decarbonisation and carbon emission reductions from waste elimination
• Reductions of virgin material extraction (across materials, water, and energy nexus)
• Reduction in biodiversity loss associated with virgin material extraction
SOCIAL
Scaling circularity can contribute to addressing labour market skill gaps and regional unemployment. Key social benefits include:
• Significant job creation, job retention, and upskilling potential
• Quality work at all skill levels
• Cost savings from products-as-a-service and remanufactured/refurbished goods
BUSINESS
The circular economy represents a significant innovation and differentiation opportunity for enterprise. Key industry benefits include:
• Resilience to resource price-volatility and supply-chain shocks
• New revenue models and value creation opportunities
• Enhanced customer relationships and enhanced customer loyalty
Enablers of the Circular Economy
Widespread support of the circular economy is essential for a smooth and successful transition. Behind the scenes of this global movement are individuals, organisations, and systems acting as catalysts for change to mainstream circularity. Without enablers of the circular economy on a wide scale to smooth the way for change and foster practices and policy to encourage circularity, change wouldn’t be possible.
Industry 4.0 Digitalisation
Circularity is enabled by digital technologies and strategies referred to collectively as the Fourth Industrial Revolution or “Industry 4.0”. Digitalisation strategies include the Internet of Things, block-chain, advanced robotics and automation, artificial intelligence, remote-sensing, and 3-D printing amongst others. Digitalisation is a key enabler of the circular economy because of the importance that information plays in keeping materials, components, and products in-use in the economy. From data-driven circular processes in manufacturing sites, to real-time resource usage information across product life cycles and value chains, to material specifications contained in digital material passports to optimised reverse logistics.
Mobilising Finance
Faster mobilisation of capital is one of the key ingredients needed to accelerate the transition to a circular economy. Current funding & investment models largely ignore linear risks associated with linear business practices, e.g., scarcity of primary resources, volatility of resource prices and increasingly stringent environmental laws, but that is starting to change. Some key examples of circular financing developments include: •The Joint Initiative on Circular Economy (JICE), launched by the European Union’s largest public promotional banks and institutions •The Mulilateral Development Banks (MDBs) have established a joint working group to focus on continued support for circular economy approaches •Intesa Sanpaolo set up the Plafond, a dedicated €8 billion credit facility (extended in 2020 from an initial €5 billion) for innovative companies with business practices aligned to circular economy principles. •Investment giant BlackRock launched the BGF Circular Economy Fund which invests globally at least 80% of its total assets in the equity securities (i.e. shares) of companies globally that benefit from, or contribute to, the advancement of the “Circular Economy”.
Cross-Sectoral Collaboration
Policy & Regulatory Frameworks
European policy has been a key driver in the transition towards a circular economy. The 2020 EU Green Deal placed circularity at the centre stage, promoting sustainable business practices for a future-proof economy. The recent introduction of the Corporate Sustainability Reporting Directive (CSRD), closely links a company’s resource use with its sustainability performance. For the first time, the ESRS E5 standard within the CSRD mandates reporting on resource consumption, waste generation, circular design, and material recovery. This encourages companies to assess their circularity across their entire value chain. In Ireland, the upcoming third update of the Climate Action Plan (due in 2024) reinforces this commitment. The plan outlines a roadmap to achieve Ireland's climate goals and promotes circular innovation through policy measures like Green Public Procurement. These measures incentivize wider adoption of circular strategies across Irish businesses.
Global circularity currently stands at just 7.2% (Circle Economy, 2023). To progress the circular economy, cross-sectoral synergies are vital to transforming linear business models to circular ones. This collaborative approach can be seen throughout the CIRCULÉIRE network. Our Innovation Pilot Projects and member projects such as The ZeroNet’s C2X Smart Waste Pilot perfectly exemplify how knowledge sharing and capacity building can unlock circular solutions. Novel forms of multi-stakeholder collaborations are pivotal because they demonstrate and exemplify the value of circularity and contribute to the transformation of industrial sectors through mainstreaming circularity thinking.
Enabling Infrastructure
The transition from a linear “take-make-waste" model to a circular economy in Ireland requires infrastructural change. For example: •Collaborative online platforms to facilitate sharing, renting, or leasing products to extend their lifespan. •Efficient reverse logistics networks that enable refurbishment or remanufacturing through take-back or collection schemes •Real-time digital marketplaces that can facilitate industrial symbiosis between industries and sectors by harvesting underutilised resources from one another. •Expanding investment in local and national recycling plants to capture valuable materials currently lost from industrial waste due to insufficient economies of scale.
Mindset Change
Social factors, particularly environmental values and beliefs are having a direct impact on consumer behaviour. This is driving consumers towards the more sustainable option, leading to a demand driven shift in how manufacturers are managing their supply chains. The rise of social enterprises that promote access over ownership such as clothing rental online stores and apps, are making it easier for consumers to choose a more circular option.
Circular Economy Strategies
Design for Circularity
Design for Circularity refers to the process in which companies seek to re-design their products and associated business models to enable the retention of embedded value. Design for Circularity is aligned with Eco-Design and seeks to anticipate and minimize negative environmental impacts associated with manufacture, use and disposal of products. Design for Circularity gives priority to design principles and strategies which enable materials, components, and products to have multiple use-lives in our economy.
Sectoral Opportunities
Food & Drink
Ireland's renowned food & drink sector, including over 700 manufacturers and employing over 160,000 people (Teagasc), faces a critical challenge: reducing its environmental footprint. Currently, agriculture contributes nearly 39% of Ireland's greenhouse gas emissions (SEAI). The agri-food sector holds immense potential for embracing circularity and reducing its environmental impact.
This can be achieved through several key approaches. First, by optimising production processes, the sector can minimise waste generation and energy consumption. Second, closed-loop production systems can be designed, where food processing byproducts are reused as valuable inputs within the production chain, minimising the need for external resources. Finally, valorisation through cascading utilises food waste and byproducts to create high-value secondary raw materials for other industries, such as bioplastics or biofuels.
