About The Circular Economy
Circular economy is a regenerative and renewable industrial system. Comparing the products in a linear economy that goes to waste, circular economy products are regenerative, use renewable energy, and avoid toxic and nonrenewable materials. Through redesign materials, products, and business models, circular economy is able to eliminate waste and use resources more efficiently.
The report from the collaboration of McKinsey & Company, the World Economy Forum, and the Ellen MacArthur Foundation points out that circular economy can general 500 million USD of net profit, 100,000 jobs, and avoid 100 million tons of material waste, all within 5 years. In addition, the world can save up to 1 trillion USD worth of material and create over 1 million jobs in the worlds remanufacture industries and European recycling industries.
Different from the Linear Economy
The current economy development is a linear consumption model. It starts from extracting raw materials from nature, processing them into products, and then getting throw out after usage. However, in a state of population growth, urbanization, and globalization, the real cost isn’t being reflected. Climate change, nature degradation, waste pollution, and other problems started to rise. Through the increase demand of raw material, the cost of extraction increase, and so does the price. As a result, the cost and the risk for the raw materials purchased by industries will rise and thus decreases the competitiveness of the traditional manufacture industries.
Whether it is industry, environment, or society, all sectors in Taiwan need to face the challenge in a timely manner. Circular economy is a regenerative system that is the solution to the problem.
◤Since the advancement in technology, the price of products has been greatly reduced after the industrial revolution. However, the decline has been surpassed by the increasing spikes in the recent decades.
Characteristics of a Circular Economy
Biological cycle and Technical cycle
In the most ideal circular economy system, all products, materials can be categorized into bio and technical cycle. They will stay in the loop and create no waste.
Products are made from biodegradable materials, and are able to return to the bio cycle to provide nutrients.
The common methods of returning to the bio cycle are through anaerobic digestion, composting, and more. Also, materials can practice cascade cycle to prolong its usage till the very end.
Product materials continue to return to the technical cycle. They are able to recycle and reuse the materials or even up cycle to higher value products.
Products that are no longer usable can be repair and refurbish. Plastic, metal, and other non-biodegradable materials are recycled into new products. This is the way to use resources efficiently.
Six Development Opportunities
Contrast to the current model of “take, make, dispose” in the linear economy that can only profit from cutting cost and increasing price. Circular economy provides many rooms to generate value. The six main development opportunities are as followed:
Most of the product design nowadays lacks a systematic view reusing of its materials. Thus, even when the product gets recycled, not all the materials can be recovered, so it generates waste. Therefore, the best way to improve is to start from the beginning, to redesign.
2. Circular Processing
Based on different products, the practice of repair, reuse, refurbish, remanufacture, and other similar processes can make the use of the resource more efficiently; making the most out of the product and the resource, creating benefits for both business and consumers.
3. Circular Agriculture
Bio-based material and waste both have great value. Through the process of bio-refinery, pharmaceuticals and chemicals can be created, food and feedstock can be produce, biogas and compost can be generated, and all of them have economic benefits that allow nutrients to return to nature. This creates a sustainable circular agriculture.
4. Closing the Loop
The current recycling system is energy inefficient, polluted, and low in recovering rates. If planned accordingly, there is substantial amount of profits to be realized.
An industry’s waste can be a resource for anther industry. When the collaboration is created, it can save both the environment and cost.
Thanks to the modern information technology and social media community, sharing, exchanging, and leasing are becoming easier to help us use resources more efficient. This also revolutionized many traditional business models.
6. Innovative business model
There are always rooms to create value in a circular economy system. However, these values are only generated when new business models are created. Innovative business model practice the ideas and compete with the linear model products.