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What is the Circular Economy?

Circular Economy is defined as the fourth industrial revolution, together with the Industry 4.0. It provides four basic principles for the definition of a new economy based on regeneration: - Product as service (Product as Service); - Sustainable and innovative materials; - Sharing economy; - Regeneration of the product; - Design of products for a longer duration.
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Indice

  1. Cos’è l’economia circolare?
  2. Origini dell’economia circolare
  3. L’Europa e l’Italia per l’economia circolare
  4. Numeri sull’economia circolare
  5. Definizione di economia circolare
  6. L’evoluzione del termine nel tempo
  7. La Ellen MacArthur Foundation
  8. I modelli di business nell’era dell’economia circolare
  9. La definizione di Economia Circolare della Ellen MacArthur Foundation
  10. Da un modello economico lineare a uno circolare

What is the Circular Economy

2019 is the year of the circular economy, a model that is increasingly gaining traction among the countries of the European Union, determined to implement a new agenda of measures to protect the planet from all the waste we are drowning in, due to;  population growth, lack of raw materials and the evolution of the production process.

  • Reduce, at the heart of circularity is the concept of reducing the consumption of raw materials through the design of products with a long life, simple maintenance and lower costs;
  • Reuse of raw materials is the first major step in the life cycle of a product, to conserve the energy spent to create said product;
  • Recycling is the last step in a product’s life cycle when the product is disassembled and the materials used to make it are used to start the life of another product.

Origin of the Circular Economy

The circular economy is not a recent concept in fact it dates back to the 70s, when academics and businessmen began to conceptualize it – in reality it is a natural process from which we can draw inspiration.

According to the Ellen MacArthur Foundation – named after its founder and president, Ellen MacArthur, who left her sailing career in 2009 to devote herself full-time to her battle for the environment – the term is defined as «an economy which is regenerative by design. In a circular economy there are two types of material flow: biological ones, able to be reintegrated in the biosphere, and technical ones, destined to be re-used without ever entering the biosphere. Circular economy is therefore a system in which all activities, starting with extraction and production, are organized in such a way that someone’s waste becomes the materials for someone else’s creation. On the other hand the linear economy means that, once a product reaches the end of it’s life, the cycle of said product simply becomes waste, forcing the economic cycle to continually repeat the same pattern: extraction, production, consumption, disposal»

Europe and Italy in the fight for sustainability

There has never been pressure like there is now to think of something new, the cause of this being the saturation of our current Circular Economy as it reaches its limits, and its time to find an alternative. The European Commission who has been working on these problems since 2015, has approved an agreement that will force member countries to recycle at least 70% of urban waste and 80% of packaging waste, in addition to the prohibition of letting biodegradable and recyclable waste be thrown into landfills. These rules should be enforced starting 2030 and are now being examined by the European Parliament. MEPs who are trying to find an efficient balance between waste and recycling as well as work out a system that can include countries such as Germany and Austria, which already recycle 66% of their waste as well as countries like the Czech Republic that aren’t even recycling 30% of their waste.

The Circular Economy protects the environment and helps save on production and management costs creating financial value as well. Italy is even in quite a good position for the shift. The document created by the Ministry of the Environment that pushes for the protection of the land and the sea as well as guides us “Towards a model of circular economy for Italy” – this document can be consulted online – with regards to the waste sector, urban and specialized production has created more than 178 million tons of waste and that number can only get bigger, on the other hand a system based around recycling can make the Italian economy increasingly ciDrcular and increasingly efficient. The European Commission predicts 580,000 jobs  created after the shift, of which 190,000 would be in Italy, as well as annual savings of up to 72 billion euros for European companies. Their is interesting data on the quantity of primary and secondary materials  which can be saved through the implementation of an efficient recycling system. For example if we consider just paper, wood, glass, plastics and organic materials, around 10.6 million tonnes were put back into the market in 2014 (over 60% for material recovery), and their was an increase of 2% in 2015. Focusing on the Circular Economy therefore means stimulating the creativity of Italian businesses by showing them the money which can be saved through the reuse of materials. An important step will be the one from a need to an opportunity.

Data on the Circular Economy

In the report “No time to waste” published by Merrill Lynch of the Bank of America, the production of waste increases every year by 11 million tons, of which 75% is immediately buried in landfills or burned in incinerators while only 25% is reused or recycled. By the estimates of the 2030 requirements the gap between demand and supply will account for almost 8 billion tons of wasted primary materials by the end of the next decade which will only grow from there. Some research even shows the wasted materials reaching upwards of 29 billion tons by 2050. Which shows just how fundamental a good recycling system will soon become for the protection of our planet.

The Definition of a Circular Economy

The Circular Economy is a viewpoint that flips all the values believed to be true throughout the 20th century on their head. From linear growth centered around the use of virgin materials it moves instead towards a system centered around the reuse and recovery of materials mimicking the ideas found in nature as the basis for the system. The difficulty of bringing this to a national and subsequently international scale is obviously slowing down the shift and success of this system but gradually it is coming to fruition. It is the title which holds so many different worlds together: from the bio-economy to the sharing economy, to      re-manufacturing and  finally the advanced handling of waste, all of it possible through advanced logic that isn’t always immediate.

The Circular Economy’s Evolution Through Time

In the last few years the term has gained popularity despite not having a good system of measurement for businesses (the most common system which is used by lots of certification businesses and the Ministry of the Environment now uses environmental indicators of which there are more of everyday). To find the origin of the term we have to go back to the broader term “ecology”, an idea introduced by the German biologist Ernst Haeckel, who then went on to try and find a more specific term in the mid 1970s: in 1966 the economist Kenneth Boulding put forward a comparison between the earth and a spaceship in his book “The Economics of the Coming Spaceship Earth” to help people understand the concept that we only had a limited quantity of resources. In the book Boulding says that the survival of the human race is linked directly to our capacity to conserve and efficiently use the resources we have at our disposal and replenishing the environmental blank we draw from everyday. The shift from a cowboys world that stretches out forever in front of him to that of an astronaut which is defined by the limits he has.

In 1971 Barry Commoner, a famous teacher of environmentalism  began to speak about a circle that needed to become a closed circuit. Then in 1976  Walter R. Stahel along with Geneviève Reday-Mulvey began to link science with economics in their report titled “Potential for Substitution of Manpower for Energy” which was sent to the European Commission. In 1982 Stahel alongside Orio Giarini, established the Product-Life Institute where businesses could increase their financial gain by selling their ideas as a service instead of a store bought good.  Businesses who adopted this system could establish a long term and continuous relationship with their consumers maximizing the value of their product. in 2002 the book “From Cradle to Cradle” by William McDonough and Michael Braungaret signaled an important step for the sustainable sector. The authors compared the natural cycle of a tree to that of an industry, an important milestone for the theory of the Circular Economy.

The Ellen MacArthur Foundation

It was 2009 when one of the most influential organizations for the cause comes into being: The Ellen MacArthur Foundation. The organization led by the famous Ellen MacArthur, who began almost immediately to produce reports and analysis of a larger and more methodical scale then anything seen before, managing to give an exact definition of the Circular Economy as “an economy which is regenerative by design just like the natural process”. Because of the organization many important companies have united under the CE100 project, and more recently a they were given a 5 billion euro grant from Intesa Sanpaolo, the famous Italian bank who is fighting for the Circular Economy in its own way.

The Circular Economy Business Model

Circular Business Model is the secret to elongating the life of many different businesses at both a national and international scale. It all begins from a few broad categories which can give an overview of the correct business practices and communicate them to the broader public, to more efficiently communicate more specific ideas later on. And it all starts from single businesses moving towards these ideals.

  • Products as a service, and therefore letting multiple people make use of a product as much as possible instead of one person using it occasionally.
  • Regeneration is the implementation of circularity into a products life cycle. Therefore the key element is re-manufacturing.
  • Up-Cycling the beginning of the life of a new product built using old recycled materials.
  • Life-extension extending the life of a product as much as possible so as to get as much use as possible out of the materials.

Ellen MacArthur’s definition of the Circular Economy

The Ellen MacArthur Foundation defines the Circular Economy as “a generic term that describes an economy that is regenerative by design. In a circular economy their are two types of material flow the biological kind which can be put back into the biosphere and technical waste which has to be re-purposed without ever entering into the biosphere”. A Circular Economy is therefore an economic system which was designed to reuse materials for multiple production cycles, so as to reduce waste.

From a Linear System to a Circular One

A Linear Economy takes makes and disposes this is the opposite of a Circular Economy instead relying on enormous amounts of both resources and energy and it is less and less adapted for reality with every day that passes. Working to be as efficient as possible reducing the quantity of resources and fossil fuels we use is enough to slow down the collapse of our current economic system but it will never be enough to stop the exhaustion of all our primary materials.

Which means the transition from a Linear Economy to a Circular Economy is an ever present necessity.We need to take into consideration all the phases of a products life – from it’s design, to  it’s production, to it’s consumption and even what happens to it at the end of it’s life, being able to take every opportunity to limit the waste of materials and energy. It is important to prevent damage to our environment whilst also creating new sustainable value.

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