What is the Circular
Economy?
Circularity is a new way to design, make and consume
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.
It is now widely recognised that the circular economy (CE) agenda is fundamentally intertwined with the zero-carbon agenda. Europe has committed to accelerating the transition to a circular economy – with circular principles central to the EU’s Industrial Strategy and EU Green Deal. In this context, as Ireland navigates the path to COVID-19 recovery, now is the opportunity to embed circularity in the Irish economy – creating substantial socio-economic, environmental, and business benefits.
Circular Economy
Shifting to an economy where the embedded value in materials, components and products is retained through resource life-extension strategies.
Benefits of the Circular Economy
Circular business models deliver tangible macro-economic, environmental, social, and business value
Circular principles seek to recover and preserve the embedded value in materials, components, and products. Implementing innovative circular strategies and business models – which keep materials, components, and products in-use in the economy – creates significant macro-economic, environmental, social, and business benefits.
In 2015 the Ellen MacArthur Foundation estimated that implementing circularity would enable Europe to increase its’ resource productivity by up to 3% per year which by 2030 would represent an annual €1.8 trillion opportunity.
More recently, in the Circular Economy Action Plan (CEAP 2.0) the European Commission highlighted that implementation of circular economy principles will increase the EU’s GDP by an additional 0.5% by 2030 while creating 700,000 new jobs.
In an Irish context, the EPA estimate that annually we use 100 million tonnes of materials – where implementing a 5% material improvement across the economy would represent an annual €2.32bn opportunity. Moreover, valorising waste creates opportunities for import substitution and reinforces the economic benefits of regional supply-chains to Irish companies.
MACRO-ECONOMIC
The circular economy is a new economic model which enables the decoupling of GDP from resources. Key macro-economic benefits include:
• Economic growth and resource cost savings
• Significant job creation and job retention opportunities
• Innovation opportunities
ENVIRONMENTAL
Circularity is a key carbon mitigation tool and integral to the wider sustainability agenda. Key environmental benefits include:
• Decarbonisation / carbon emissions reductions
• Reductions in consumption across the resource nexus
• Contributes to several UN Sustainable Development Goals (SDGs)
SOCIAL
Scaling circularity can contribute to addressing labour market skill gaps and regional unemployment. Key social benefits include:
• Significant job creation and job retention potential
• Providing quality work at all skill levels
• Financial savings and consumer empowerment from repairing 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
• New customer relationships and enhanced customer loyalty
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.
Product-Service-Systems (PSS)
A product-service-system (PSS) describes the transformation of a traditional product offering into a product-service model where ownership of a product is retained by the manufacturer or distributer. In PSS, end-users are given access to products through pay-per-use, short-term rental, or long-term lease models. Central to successful PSS are products that are designed for; longevity, and backward and forward compatibility, utilise predictive maintenance and have an enabling service network which ensures high-quality performance.
Re-Use & Shared Use
Re-use refers to when a product or component is used again for the same purpose. Shared Use refers to collaborative consumption (e.g. Peer-to-Peer or B2C) or asset sharing (B2B). New B2B business models are emerging which facilitate the sharing of overcapacity of business equipment and even the underutilised skills and knowledge of personnel. Re-Use and Shared Use are cornerstones of the circular economy because they increase the utilisation of products across multiple use-lives.
Remanufacturing
Remanufacturing is when a used product is returned to the standard of an equivalent new product. Remanufacturing involves the disassembly, restoration, replacement and testing of the individual components and the product itself to ensure it complies with its original design specifications. Remanufactured products come with warranties assuring that products meet like-new performance standards. These warranties are at least equal to that of a newly manufactured equivalent.
Repair & Refurbishment
Repair refers to the process through which apparent faults and product malfunctions are rectified. Refurbishment goes a step further and entails activities to refinish and sanitize a product, so it is fit to serve its original function. Refurbishment results in a product that is in good condition but is not directly comparable with a new or remanufactured product. While important resource-life extension strategies, neither repair nor refurbishment guarantee the product will perform like new.
Take-Back Schemes & Reverse Logistics
Take-Back Schemes are programmes implemented by companies to recover products or packaging from end-users so they can be repaired, re-used, remanufactured, or recycled to recover the embedded value in raw materials. Take-Back Schemes are underpinned by what is referred to as Reverse Logistics. Reverse Logistics refers to when goods move from end-users back to the retailer/distributor, original manufacturer or a third-party repair, re-use, or recycling organisation.
Industrial Symbiosis
Industrial Symbiosis (IS) refers to a collaboration between two or more geographically close companies whereby residuals or by-products of one industry or industrial process become the raw materials for another process within a manufacturing site (Closed-Loop Production) or industry. Industrial Symbiosis includes: the capture, recovery, and re-use of waste (materials, water, or energy) and the development of secondary raw material markets and logistics networks to facilitate by-product exchange or co-product development.
Recycling
Recycling is the collection and processing of discarded materials and transformation into secondary raw materials. There are three types of recycling – mechanical, thermodynamic or energy recovery. Mechanical refers to when residuals are mechanically transformed without changing their chemical structure. Thermodynamic (chemical) involves breaking materials into their molecular components to create raw materials for new products. Energy recovery by combustion – a last resort – is when waste is transformed into usable heat, electricity, or fuel.
