What is a circular economy?

A circular economy is an economic and industrial system in which resources are restorative and regenerative:

Unlike the linear economy in which products are disposed of after use, a circular economy utilizes renewable energy rather than relying on toxic chemicals which inhibit reuse. Through the redesigning and rethinking of materials, products, the manufacturing process and business models, the CE aims to eliminate waste entirely. By focusing on resource efficiency and trying to create more value with fewer resources, we can ensure that Earth’s limited natural resources are used and recycled in a sustainable fashion

Why do we need to move toward a circular economy?

Since the Industrial Revolution, we have subscribed to the linear model of economy which involves: extracting raw materials, using raw materials to produce goods, and selling the goods to consumers who then dispose of them after use. This industrial process, as well as people’s current lifestyles, require that limited natural resources are continuously consumed in order to produce goods which are ultimately incinerated or buried in a landfill.

As the world experiences population growth, urbanization, and globalization of the supply chain, it is also suffering from climate change, ecological depletion, waste problems and a number of other serious issues. Furthermore, with the continual increase in demand for raw materials, the cost of mining continues to rise, as will the price of raw materials. This will cause the risks and costs of industry procurement of raw materials to climb, thereby reducing the competitiveness of traditional manufacturing. Regardless of whether it is business, environment, or society, all sectors are responsible for swiftly responding to these challenges.

 

While the linear economy relies on resource depletion, the circular economy involves a model of economic development in which resources are continuously cycled, from resources, to products, back to resources. This system creates very little waste or even no waste at all, which is the ultimate target. In a circular economy, we learn the principle in nature that says, “there is no waste, only misplaced resources”, solving the predicament of economic development and its resulting environmental depletion.  

Not just a good idea, but a good business!

When making products, beginning with the extraction of natural resources and progressing step by step from manufacturing, assembly, eventually to sales, we invest a great deal of materials, resources, energy, and labor. Yet, once the product has been used, it is discarded, as is the value of all of the resources that went into it at every step in the process.

 

Why is this the case? Looking at cell phones as an example, when the screen of a phone is broken, but all other parts are still functioning, the linear economy encourages consumers to purchase a new product, and the manufacturers themselves market it as the more cost-effective option. If a new product is purchased, all of the residual value of the cell phone with a broken screen is lost.

Conversely, in a circular economy, we can extract the remaining value from old products and convert it into a new source of value. This will allow for the discovery of many opportunities in business, entrepreneurship, employment, and innovative business models, and the value that was originally going to be lost is preserved, as are all of the resources invested in the manufacturing process.

Circular Economy Transition Roadmap for Enterprises

Why do we need a circular economy?

The issues with sustainability may seem huge. The sustainability problems with the society and the environment lie in the development pursuant to a linear economy that relentlessly manufactures products and stimulates consumption. The products are buried or burned after being used for a period of time, consuming limited resources along the way and leading to various environmental issues. These challenges also become risks for corporations in their pursuit of sustainable operation. If we are to take a different approach, by which enterprises practice circular economy via “innovative” measures, not only we can reduce the risks involved and the reliance on raw materials, but the circular products or services can further introduce brand values that differentiate the enterprises on the market, establishing unique competitiveness and ushering in new opportunities for sustainable operation.

With the mindset of circular economy, each resource can be utilized to the extreme by design within the system of industries. Hence, the economic development can no longer require massive exploitation and consumption of resources, while attaining the goals of zero waste and zero emission. Thus, the economic development will not lead to environmental degradation, and the SDGs shall be achieved as a result.

What is a Circular Economy?

A circular economy is an economic and industrial system where resources can be restored, recycled, and reused. The concept is to create more values with fewer resources, so as to ensure the finite resources on the planet be used in a circular, sustainable fashion. The circular economy encompasses three crucial principles, Product as a Service, High Value Circulation, and Systems Collaboration.

How to Put the Circular Economy into Practice?

The manufacturing department is a vital element to the industrial structure of Taiwan and plays a key role in the international community. Taking manufacturing into consideration, a corporation is able to explore the means to circular economy through the various stages across the product life cycle such as production, consumption, and utilization. Different industries can cooperate with one another via technical and biological cycles.

Why do we need to move toward a circular economy?

Circular economic systems, which mimic nature’s endless life cycles, can be divided into two categories (as depicted below).  All materials can be included in either the biological or technical cycle and are used continuously, thus eliminating the concept of waste.

via Ellen MacArthur Foundation

Biological Cycle

If a product is made of biodegradable material, it goes through the cascade steps in order to preserve the highest possible value. Biomass which has no higher value application can go through biochemical extraction, anaerobic digestion, or composting to return the nutrients back to the biosphere safely. Applying circular economy ideas to the use of agricultural resources is an important basis of development in farming, fishing, and livestock industries.

Technical Cycle

Chemicals, alloys, and other manmade materials that are not biodegradable, can go through the following methods: repair, extending product lifespan, product-sharing, reuse, re-sale (second hand), refurbishing/remanufacturing, and recycling. This system allows the products to maintain the highest value for the longest time and be kept within the technical system, rather than be haphazardly dispersed in nature. It also results in a more efficient use of energy and resources.  

Five Central Concepts of a Circular Economy

Product Redesign 

In the cycle of a product, an important step is “design”. Many products today are not designed with consideration of the system of recovery and reuse once the product is used, so the recycling plant has no choice but to break up the product, losing much of the value in the process. However, if, during the designing process, the product was created to be more durable, easily repairable, renewable, recyclable, biodegradable, and not reliant on limited resources, then, paired with an appropriate manufacturing and recycling system, manufacturers would be able to greatly reduce waste and low-performing applications, as well as open up new markets.

Innovative Business Models

In the cycle of a product, an important step is “design”. Many products today are not designed with consideration of the system of recovery and reuse once the product is used, so the recycling plant has no choice but to break up the product, losing much of the value in the process. However, if, during the designing process, the product was created to be more durable, easily repairable, renewable, recyclable, biodegradable, and not reliant on limited resources, then, paired with an appropriate manufacturing and recycling system, manufacturers would be able to greatly reduce waste and low-performing applications, as well as open up new markets.

The Power of the Inner Loops to Create the Highest Value

In a circular economy system, the highest possible value of resources must be preserved at any point in the system. At each step of creating a product, from mining of natural resources and design to finally assembling the product, people are investing valuable labor and intelligence, so once it is used the highest value should be maintained through: repair, upgrade, remanufacture, and remarketing to maintain the economic efficiency, and use fewer resources to create a greater value.

Waste to Resource

In a circular economy waste is transformed into a resource. After a product’s end-of-life, the value of its raw materials can be recovered by through innovative systems of recycling and upcycling of the resources into a different product’s cycle. Taking a second look at by-products that would normally be recycled can, in the short-term, save on disposal costs, and also create new sources of revenue. In the long term, it can help companies save on resource costs in manufacturing, help infrastructure and create jobs, and improve quality of living by reducing waste and pollution.

Industrial Symbiosis

When different industries work together through the exchange of materials, energy, water, or by-products, they share an established infrastructure to achieve a competitive advantage, reduce negative impacts on ecology, and reduce the costs of waste disposal. When designing science and industrial parks, it is no longer necessary to offer low utility fees and tax concessions, instead the incentive will be effective inventory of by-products in the industrial park and the exchange of by-products through public channels. This will encourage links between companies, as waste from one enterprise can be used as raw materials for another. With this method, industrial parks will escape the false dilemma of choosing between of economic growth and environmental protection, and allow for more fruitful results.

Myths about the Circular Economy

Circular Economy is Not Just About Environmental Protection

Under the current economic system, rules and regulations which attempt to make the markets fairer and promote growth only come about as responses to the environmental destruction that has followed the industrial revolution. This is purely reactionary and can never compete with a system that has enough foresight to account for and avoid destruction in the first place. In contrast to the current economic system, the circular economy takes an enthusiastic, proactive approach to finding and addressing the roots of environmental problems, raise the framework of the discussion to a higher level, and bring a more imaginative response to the issues. 

Circular Economy is Not Just Recycling

Although promoting the recycling rate is good, the quality of the recycled goods is most important. In reality, most recycled goods are downcycled, meaning products or materials with economic value or function that are recycled are merely delaying when they are discarded. There is no way for the products to be reused for a future product, so it does not actually reduce the need to mine for natural raw materials.  In a circular economy, after recovery, products are processed so they can be reused as resources and returned to the original supply chain. To do this, we must redesign the products, manufacturing process, and business model, as well as have the necessary distribution system.

Circular Economy is Not Futuristic

Circular economy is not just an idealized utopia. Many countries, cities, and companies have successfully implemented the system and become internationally renowned cases. The era of circular economy has arrived, the question now is not whether or not we should make it a reality, but how!

Taiwan Circular Economy Network

4F, No 97, Jingye 1st Rd. 104 Zhongshan District, Taipei, Taiwan

+886 988-158-667

 

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