Circular Economy Overview

Today's linear ‘take, make, dispose’ economic model relies on large quantities of cheap, easily accessible materials and energy, and is a model that is reaching its physical limits. A circular economy is an attractive and viable alternative that businesses have already started exploring today.

Circular economy characteristics

While the principles of a circular economy act as principles for action, the following fundamental characteristics describe a pure circular economy:

Design out waste

Waste does not exist when the biological and technical components (or ‘materials’) of a product are designed by intention to fit within a biological or technical materials cycle. The biological materials are non-toxic and can be simply composted. Technical materials—polymers, alloys and other man-made compounds – are designed to be used again with minimal energy and highest quality retention (whereas recycling, as commonly understood, results in a reduction in quality and feeds back into the process as a crude feedstock).

Build resilience through diversity

Modularity, versatility, and adaptivity are prized features that need to be prioritised in a fast-evolving world. Diverse systems with many connections and scales are more resilient in the face of external shocks than systems built simply for efficiency—throughput maximisation driven to the extreme results in fragility.

Read more about balancing efficiency and resilience on Circulate.

Work towards energy from renewable sources

Systems should ultimately aim to run on renewable energy—enabled by the reduced threshold energy levels required by a restorative, circular economy. The agricultural production system runs on current solar income but significant amounts of fossil fuels are used in fertilisers, farm machinery, processing and through the supply chain. More integrated food and farming systems would reduce the need for fossil-fuel based inputs and capture more of the energy value of by-products and manures.

Think in systems

The ability to understand how parts influence one another within a whole, and the relationship of the whole to the parts, is crucial. Elements are considered in relation to their environmental and social contexts. While a machine is also a system, it is clearly narrowly bounded and assumed to be deterministic. Systems thinking usually refers to the overwhelming majority of real-world systems: these are non-linear, feedback-rich, and interdependent. In such systems, imprecise starting conditions combined with feedback lead to often surprising consequences, and to outcomes that are frequently not proportional to the input (runaway or ‘undamped’ feedback). Such systems cannot be managed in the conventional, ‘linear’ sense, requiring instead more flexibility and more frequent adaptation to changing circumstances.

Read more about systems thinking in this article on efficiency vs. effectiveness.

Think in cascades

For biological materials, the essence of value creation lies in the opportunity to extract additional value from products and materials by cascading them through other applications. In biological decomposition, be it natural or in controlled fermentation processes, material is broken down in stages by microorganisms like bacteria and fungi that extract energy and nutrients from the carbohydrates, fats, and proteins found in the material. For instance, going from tree to furnace forgoes the value that could be harnessed via staged decomposition through successive uses as timber and timber products before decay and eventual incineration.

Explore our circular economy system diagram for a visual overview of the circular economy.