What is Circular Economy?


Our existing economic model, often referred to as a linear economy, involves extracting raw materials, manufacturing products, and disposing of them as waste. Currently, only 7.2 percent of used materials re-enter the economy after their initial use, placing significant strain on the environment and contributing to issues like climate change, biodiversity loss, and pollution. This is why there is a need for circular economy.

A circular economy aims to minimize waste and enhance the sustainable utilization of natural resources through intelligent product design, longer product lifespans, recycling, and other strategies. Additionally, it seeks to regenerate nature. Beyond addressing pollution, a circular economy can also play a pivotal role in addressing complex challenges like climate change and biodiversity loss.

Why Does Circular Economy Matter to Our Planet?

Estimates indicate that we are already surpassing the Earth’s available natural resources. If current trends persist, we will require the resources of three planets by 2050.

Over the past two decades, global material consumption has surged by more than 65 percent, reaching 95.1 billion metric tons in 2019. During the same year, about 13 percent of food intended for human consumption was lost post-harvest, with an additional 17 percent wasted at the household, food service, and retail levels. Electronic waste amounted to 7.3 kilograms per person in 2019, with the majority not being managed responsibly, posing environmental and health risks.

These statistics underscore the urgency of reevaluating our use of finite resources for both human well-being and the planet’s survival. Research indicates that to return to safe consumption levels, we must reduce global material extraction and consumption by one-third, making the transition to a circular economy imperative in achieving this goal.

What are Some Examples of Circular Economy?

The CE principles are applicable across various sectors.

1. In textiles and fashion, initiatives employ regenerative agriculture for organic cotton and natural fibers, utilizing natural dyes, enhancing garment quality, and ensuring consumer and environmental safety. 

2. In construction, circular solutions encompass reducing virgin material use, reusing existing materials, and adopting regenerative alternatives like timber over carbon-intensive materials.

3. In a circular economy, electronics undergo refurbishment, biodegradable packaging becomes standard, and animal waste transforms into natural fertilizers and biogas for energy.

Notable instances of circular economy adoption include:

  • Kosovo supports startups and SMEs with a pollution-detecting mobile app.
  • Ghana advancing urban waste management through entrepreneurs using recycled plastic waste for housing.
  • Jordan creating opportunities for women through circular economy initiatives, fostering employment, skills development, entrepreneurship, and community leadership.
  • The Philippines enforcing a bill that compels large manufacturers to reduce plastic packaging usage and cover the costs of plastic waste management.
  • Mexico integrating circular economy solutions into climate action plans, with training programs aiding subnational authorities in identifying circular actions contributing to their NDC roadmap.

Also See: What is Climate Change?

What are the Challenges in Transitioning to a Circular Economy?

The challenges are as follows:

1. Lack of Knowledge and Awareness

Many countries do not fully grasp the benefits of the circular economy, particularly in relation to climate and biodiversity, impeding progress.

2. Financial Hurdles

Small and medium-sized enterprises (SMEs) and other entities encounter difficulties securing funds for the shift to circular models. Transition periods, like adopting organic cotton production or circular practices, demand significant investments, knowledge sharing, community-building, and ongoing training.

3. Complex Impact Assessment

Challenges in tracking and reporting progress, notably in reducing scope 3 emissions within supply chains, stem from factors like opaque supply chains, limited supplier connections, and complex accounting methods. These complexities contribute to the overall challenge of the widespread adoption of circular economy principles. Nevertheless, the potential benefits underscore the need to overcome these obstacles.

Recommended: 8 Economic Sustainability Examples that Inspire Change and Growth

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