Understanding the principles of the Circular Economy
“Rethinking and redesigning our economic model based on the constant reuse of our extracted resources is a definite modernisation and positive evolution from our standard economy.”
Hello Alexandre and thank you for your time! What is your definition of Circular Economy and why are we talking about “Circular Economy 2.0”?
The Circular Economy is the understanding of the eco-systemic metabolisms leading to the abundance of flows. Put simply, we should be imitating natural cycles as closely as possible. For instance, natural photosynthesis is efficient and available in abundance. Applied to our daily needs in energy, finding a technology that replicates photosynthesis using biological elements could replace all our needs for energy supplies for, for instance, the highly polluting photovoltaic solutions we use today. Circular Economy is about finding new pockets of growth within our environmental boundaries in the constant re-value of the already extracted resources we have today. And we have enough of them! This is mainly a matter of rethinking the way we grant access so that all of us can keep enjoying life for the many generations to come.
The Circular Economy 2.0 builds on the Circular Economy. Yet it considers that poverty is also an externality of our wrongly designed economic system. Like waste, poverty does not exist in nature. Like waste in the Circular Economy, poverty should also be designed out using the same “Circular Thinking” approach. Circular Economy 2.0 suggests that the social dimension should be a critical part of what is considered our next economic model. We understand the cost of a waste economy. The cost of an unequal economy is also huge. The top three Global Risks 2017 of the World Economic Forum are all about this: inequality, social divides and job losses. Let’s not replicable the same mistakes of our linear world!
Why should we consider that shifting to a more Circular Economy is a real modernisation of our standard economy?
In recent years we have realised that our world is not only finite, but that we are reaching its limits far quicker than expected. Rethinking and redesigning our economic model based on the constant reuse of our extracted resources is a definite modernisation and positive evolution from our standard economy. Endless fossil resources and exponential growth only exist in an industrial world we invented over one hundred years ago. The solution lies in the understanding of the value of our stock of materials, and how one can reuse these materials keeping their value at an all time high. This would lead to less CO2 emitted, less extractive activities, less energy required to transform our products and use them, more value on unused resources we call waste today, more value on forests as our stock of oxygen, more value on the preservation of our soils to feed more people, and so on. This is a definite advancement in the history of human beings.
What are the main benefits of this economical transformation?
The main benefits are first for the businesses themselves. Corporate risks are coming from many angles, but mainly it’s the access to the raw materials needed to manufacture goods. The challenge that businesses face is that we are either running out of some of the critical underground resources which will lead to a surge in prices for the years to come, or they are available but we should plan to keep them under the ground, unless we face the risk of going beyond the 2 degree threshold by the end of this century. Thus, providing a business strategy to increase business resilience while preserving our environmental services is the biggest benefit of this economy.
A first expectation is to see a constant drop in the CO2 emissions during this century while addressing the economic needs of more people on the planet. A second expectation is to release the pressure on our resource dependencies. The more a market grows, the more resources are needed. With the Circular Economy we will aim at decoupling this economic growth from the constant need for more resources.
Lastly, job creation. A Circular Economy could create many jobs if we design it properly. An economy where most unused resources are incinerated. As is often the case in developed markets, we only create one job for every 10,000 tons of goods produced. In an economy of the reuse of materials, the potential is rather 296 jobs. This is nearly a ratio of 300 times more jobs. In an advanced Circular Economy scenario there is potential for far more jobs. Given in a maintenance economy manpower is preferred over extracting activities — which is relying on enormous amount of energies — the cost of such economy “valuing manpower” will be cheaper to the end consumers.
We all know that renewable energy is shaping the clean global economy of the future, but could you explain why and how essential the role of the Circular Economy is in this process?
Developing clean energies is much needed. But if we do not adapt our consumption patterns in parallel to this, we will be constantly running behind with our reliance on renewable energies. Our industries are based on a throughput model where economies of scale need to be reached to reduce costs, and product designs are made on the assumptions that fossil fuels are available endlessly. Using renewable energies in such context will not sustain itself, unless we redesign our products, services and the way they are either used or consumed with these new sources of energies at their core.
What are the main barriers that prevent us to make this shift quicker? Is it those consumers that change their phones every two years; or the capitalist system, with clothing brands adding new collections to their shops every couple of weeks, or is it the governments, who are not ready to implement the change?
It is all of the above and more. There are barriers in implementing the Circular Economy such as intellectual property, laws and taxes, supply chain design, externalities not accounted for, political lobbies and so on. Yet, entering into a Circular Economy as a company or as an individual does not require much investment or involvement. The option of moving us away from ownership by using as many goods as services is a first great step into this model. It will show companies that consumers are adapting to accessing goods and give them back to the manufacturer or retailer to be [re]used for another good whenever they want or feel like it. This is usually known as the collaborative or sharing economy. These are part of the Circular Economy and are more often than not the low hanging fruit opportunities into this new framework. Once this approach fully unfolds in markets, there will be many replicable effects into the redesign of products of services, into adapting the production units closer to the users, and driving us towards the relocalisation of customised-to-fit industries within our geographies. Lastly, the Circular Economy is not about frugality and advanced recycling. Changing phones or clothes collections are okay as long as they are done differently, i.e. without using virgin resources, without using chemicals, moving away from ownership where possible since phones are your stock of components to make the next generation of phones from, and since the worn clothes will be your stock of fibres to prepare for the next fashion collection.
How does this modernisation of our economies both create jobs and tackle climate change?
Growth will be made in the constant reuse of goods as the stock of materials for the next generation of products. This means that we need lots of manpower to ensure we keep the value of these goods at their highest level at all times. To achieve this, Professor Walter Stahel, considered by many as the father of the Circular Economy, suggests that we tax what is not desired (energy hungry systems, damaging energies and extractive activities, products generating waste or made with hazardous chemicals, and so on) and that we remove tax on what is desired (manpower, products absorbing CO2 or filtering the air, agriculture using agroforestry or permaculture techniques regenerating soils, and so on). Decreasing our reliance on machinery and robots that are considered limited resources on earth while encouraging manpower which is available in abundance in a world with 9 billion inhabitants is what we desire in this model. And using manpower from this viewpoint is far from being atavistic but a great management of all flows of matters and energies, inclusive of human ones. In a Circular Economy, we need far less energy to modernise our future world, leading to an average of 30% less CO2 emissions (up to 70% less in selected countries according to Circle Economy, The Club of Rome and Ecofys). With an estimated drop of 40% of CO2 emissions as promised by the COP21 Paris Agreement, adding the impact of a Circular Economy in each one of these countries could lead to an average of 70% emissions by the end of the century, which is nearly the answer we have been looking for. With further findings in the coming years, these are reasons to be positive about our future on Earth.
I understand there are different steps in this shift. Whether it’s strengthening existing policies in renewable energy, improving our material management, creating new business models, launching investments to support the Circular Economy or working on product design. So, whose role is what in all of this?
Every organisation or individual has its role to play. Governments are enablers, businesses are drivers and people become users — instead of consumers of products. Educating these different stakeholders is the top priority so that we all go in the same direction in a coordinated fashion. New forms of collaboration are critical since not one single public or private organisation could address the upcoming challenges by itself. The understanding of where most circular value could be optimized will be highly critical to avoid the mistakes of the past. The optimisation of circular value (OCV) explains why we believe our new solution is an improvement from its past linear version. This notion of creation of such value will help us understand where we are not circular enough in our search for system effectiveness and in the eradication of negative externalities (pollution, dangerous chemicals, health hazards, scarce resource hungry systems, etc). Circular returns on investment will be driving impact-investments for a sole and unique purpose: rebuilding our ecosystems to increase our business resilience, with the objective of improving well-being for all. This is far from being utopian. It is possible with the right vision.
Why should I be supporting the Circular Economy as a citizen?
As a citizen, you are the main actor of the circular puzzle. Should you accept to move away from owning goods, the first benefit will be on your purse. Paying for an instant service as you use it will require less capital than you need in today’s economy where loans are often required to purchase a car or to buy home appliances. Using a mobility or a clean clothes service will require less investment, thus enabling you to live a better life with your existing salary. If you still prefer the option of owning the goods you want, in this case you are prepared to pay a premium for ownership. Yet, this premium could disappear the minute you decide to bring back your car or your appliances to the garage or shop, whenever the retailer is requesting you to bring it back for repair, improvement or future reuse.
Food should be growing with far less chemicals than today, rather using natural techniques. This would lead to a more balanced life with less health issues. The approach to increased modularity of products could help you tackle what we call our life accidents: divorce, loss, etc where all of a sudden we still have to repay that empty house. By reducing the size of our house, for instance, down to one bedroom, the approach to modularity could enable us to adapt what we need to our lifestyles.
Cost of living could drop if we move away from a world of the haves into a world of better experiences.
You are also the co-founder of the African Circular Economy Network. How important is it to look at reinventing inclusive growth in Africa, based on the concepts and principles that form the Circular Economy?
To me, the African continent right now has the best opportunity in its lifetime to lead by example. This continent has everything it takes to show the world what a Circular Economy is all about. The sharing economy has always existed in Africa. It is called the survival economy — nothing is wasted and everything is constantly used and reused. Today, this is a matter of professionalising this sharing model together with a society that is a collaborative one. Moving billions of people from individualistic behaviour to collaborative manners is a daunting task. The opposite is not. The same goes with Africa’s ecological footprint, which has the lowest in the world per inhabitant. Here again, it is easier to adopt a new economic model in the first place than following the wrongly designed Western one. Growing within ecosystemic limits is far easier in Africa than in any other continent. The future of Africa is bright if its leaders act on it.
What can people do to support the Circular Economy?
- Pick the products in shops using less packaging
- Buy more bio food in an aim to decrease their current premium prices
- Choose refillable containers for shaving cream and toothpaste
- Buy shoes and pens that are guaranteed for life. If it’s the right time, buy your dream brand shoes but request advice on how to best repair them so that they will last forever!
- Prefer items that you can bring back to the shops after a first use. If that’s not offered by the retailer, ask why
- Although not the best solution, try to drive electric vehicles and observe for better options as they come
- Educate your friends on the reasons behind your choices
- Make it fun and fashionable to use goods instead of consuming them. Bringing them back instead of throwing them out is cool (and very clever!)
- Separate your compostable waste from other waste so that you understand what is required to build a Circular Economy and possibly come up with the next innovation!
- Do the no-bin test at home and try to understand how you could create a house that has no waste
- For everything you do, aim at finding a way to cut cost by three-quarters of its current cost using sharing, leasing, or reusing techniques
- Rent your clothes
- Suggest ways to redesign products you have been using to shop owners or manufacturers
- Grow food with your compost, plant fruit trees, test yourself on permaculture at home
- Read about best practices
- Enjoy life!