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What’s a circular sustainable economy? Find out

Our “take, make, dispose” economy incurs a heavy ecological footprint in terms of resources, fossil energy use, and waste. In affluent countries, more energy is embodied in products and services than is directly generated through household fuel usage. With finite supplies of non-renewable resources, inevitably we will be hitting limits sooner or later. Responding to these pressures, the world economy is starting to go through a profound shift — for the better.

The waste hierarchy features, in priority order: prevention, minimisation, reuse, recycling, energy recovery and landfill. The greenest first half of this sliding scale, which is sometimes overlooked, is the basis of an important new economic paradigm known as the circular economy.

In essence, this represents an evolution towards joined-up thinking and non-linear production systems. For a long time, a holy grail of sustainability has been to decouple economic activity from energy and resource demands, and the circular economy provides a solution. The Club of Rome has estimated that on a circular economic path Sweden’s carbon emissions could be cut by nearly 70 per cent between 2010 and 2030.

The Club of Rome has estimated that on a circular economic path Sweden’s carbon emissions could be cut by nearly 70 per cent between 2010 and 2030.

To contrast with the “cradle to grave” materials lifecycle, architect and industrial analyst Walter Stahel coined the term “cradle to cradle” during the 1970s. This idea was later fully developed by American architect Bill McDonough and German chemist Michael Braungart, who today run a consultancy and accreditation body.

The simple idea behind cradle to cradle is to see material flows as “technical nutrients” that are non-toxic and can be reused many times without becoming degraded, and which circulate around the economy without becoming waste. A parallel stream consists of “biological nutrients” that can enter the environment without any harmful effects.

Recycling limitations

A group that has been very energetic in promoting the circular economy is the Ellen MacArthur Foundation set up in 2010 by a former long-distance yachtswoman. It sees the circular economy as a set of four material feedback loops, with the innermost being “maintain/prolong”, descending in priority order through “reuse/redistribute”, “refurbish/remanufacture” and “recycle”. Each successive loop requires a greater input of energy and resources.

As the outer circle of the circular economy, recycling is the least resource-efficient and also the least profitable of the four. Despite being environmentally beneficial, some embodied energy is lost in processing. Most efficient is aluminium, with a 95 per cent energy saving, but at the lower end are paper (65 per cent) and steel (74 per cent).

Closing the loop also involves buying secondhand, which if pursued as a regular habit avoids many tonnes of carbon emissions.

For recycling to succeed, industry needs to close the loop by using post-consumer recycled materials as feedstocks, in turn creating a market for recycled materials and keeping their market price buoyant. US computer maker Dell claims that utilising reused plastic parts has cut input costs. French car maker Renault currently uses 30 per cent recycled materials, with the aim of increasing this to 33 per cent by 2016.

A technical hurdle is that paper and plastic are degraded by repeatedly recycling, forcing demand for additional virgin feedstocks. This can encourage “downcycling”, where recovered materials are liable to go into lower-grade uses, such as the conversion of recycled copier paper into cardboard boxes.

Product life extension

Planned obsolescence, which began during the 1950s, has become a feature of the consumer economy, with product lifespans growing increasingly short. A similar tendency, perceived obsolescence, is dictated by fashion (in the case of clothes) or a desire to own the latest model with the newest features (for smartphones). According to Richard Girling’s 2005 book Rubbish, 80 per cent of products become waste within the first six months of their lives.

Solutions include durable design, maintenance regimes and incorporating modular features such as the interchangeable panels used on Smart cars. In the technology field, two phones — the Fairphone 2 and Google’s Project Ara — are the first designed to be upgraded, with limited releases expected soon.

Reuse & redistribute

Second-best in the circular economy is to find a new Home for functional items through a variety of avenues including garage sales, op shops, tip shops and websites such as Freecycle. With a proliferation of unwanted stuff, the secondhand markets in Australia and New Zealand are experiencing healthy growth. Closing the loop also involves buying secondhand, which if pursued as a regular habit avoids many tonnes of carbon emissions.

At a domestic level, items such as bottles, steel cans, envelopes, paper, paper bags and packaging and printer cartridges all lend themselves to reuse. Jars can be reused many times for refills of bulk liquids, and bottles are widely refilled by drinks companies in Denmark, Finland, India and Pakistan.

In the London suburb of Brixton, the Remakery is an innovative reuse centre where waste materials are upcycled into new products by numerous small business workshops located on-site. Reuse outlets in Australia include Reverse Garbage in Sydney and Brisbane, and REmida WA in Perth.

Industrial symbiosis

Recovery of industrial wastes can be facilitated by plants exchanging unwanted by-products that serve as useful feedstocks. This requires geographical co-location, large continuous waste streams, and the economic incentives to invest in exchange infrastructure. Typically, such arrangements tend to slowly evolve and become more complex over time.

Probably the world’s most impressive industrial symbiosis is found in the coastal Danish city of Kalundborg and dates back to 1961. Steam, heat, water and a range of materials are exchanged in a web involving several large corporations and the municipal council.

A similar set of 32 “synergies” has been created in the Kwinana Industrial Area, a large park south of Perth, and six have more recently been initiated in the Queensland city of Gladstone. Others are found in Guigang, China and Ulsan, South Korea.

Refurbish & remanufacture

For items that are not ready to be reused in their present condition, “remanufacture” is next in the circular economy toolbox and often involves design for ease of disassembly and reuse of components. Remanufactured products consist of a mix of reused, repaired and new parts. Areas of the economy where remanufacture is currently used include vehicle parts, electrical equipment and computers.

Extended producer responsibility (EPR), also known as product stewardship, is a framework for manufacturers to take responsibility for some wastes at the end of their products’ life. Otherwise the financial burden for disposal falls onto local government and the taxpayer.

Extended producer responsibility (EPR), also known as product stewardship, is a framework for manufacturers to take responsibility for some wastes at the end of their products’ life.

EPR creates incentives to simplify products and also to make them last longer. Toxic content is minimised to prevent it from becoming a headache down the track. Essentially, EPR is a very useful tool for nudging corporate behaviour in a circular direction, and some measures, such as Dell’s free global computer take-back program that began in 2006, were started voluntarily.

Australia’s mandatory EPR programs include the National Television and Computer Recycling Scheme, where 90 per cent of the materials are required to be recovered. The others are Container Deposit schemes running in South Australia and the Northern Territory, with NSW set to follow in 2017. Both Australia and New Zealand have a range of voluntary industry-run EPR programs.


For many consumers, it’s cheaper to replace non-functioning items than to go to the expense of repairing them. Carrying out one’s own repairs is often discouraged by time constraints, a lack of tools or knowledge, and laziness. This unfortunately has a massive environmental impact.

In 2009, a Dutch woman named Martine Postma launched the Repair Cafe movement, which has now extended to more than 800 locations. In Australia, Repair Cafes and similar initiatives are running in Maleny (Qld), Mullumbimby (NSW) and Marrickville (NSW), but are yet to arrive in New Zealand. Restart Parties are very similar, and focus more on electrical and electronic items. Originating in the UK, they are now starting to go global.

As with remanufacture, companies can design products to facilitate repair, and spare parts can be provided for a generous length of time after the product ceases to be manufactured. The Fairphone 2, which is conflict-mineral-free and modular, is designed to be easily user-repairable, with spare parts available, but at this point is not yet available in Australia or New Zealand. While there are potential dangers in unqualified people repairing electrical items, there is no need to make repair as hard as possible by using screws with irregular heads.

All three of the circular economy’s inner loops combine low energy and resource demands with a significant potential to create employment via the creation of new small businesses, boosting the local economy.

Disrupting from within

Some businesses are moving away from selling products to offering services under a pay-per-use model, also referred to as the performance economy. Instead of waiting to have their business models challenged, some companies have opted to disrupt themselves from within. Ownership remains with the company, which has an interest in making its products durable and easily repairable.

Suitable areas for pay-per-use include washing machines, transportation in place of car ownership and expensive women’s clothes that tend to be worn only once. Power tools are a prime candidate, only being used for an average of 30 minutes during their lifetimes.

Closely aligned with this model is the sharing economy, also known as collaborative consumption. With an emphasis on access rather than ownership, it connects up individuals using online platforms and makes use of under-used assets, whether these are parked cars, vacant rooms or unused stuff that’s gathering dust. Trust between participants can be achieved through the use of reputation scores.

Instead of waiting to have their business models challenged, some companies have opted to disrupt themselves from within.

Initiatives such as Car Next Door, Airbnb (for accommodation), and Open Shed (for hiring items within the neighbourhood) can avoid the need for some added car production, new hotel construction, and the manufacture of new products. Encouragingly, a 2014 Nielsen survey across 60 countries found that 68 per cent of those questioned were open to participating in the sharing economy.

An early service economy pioneer is the carpet-tile company Interface. Following an epiphany in 1994, CEO Ray Anderson reinvented the company as a provider of flooring services, in the process boosting its bottom line. This involves replacing tiles when they wear out, and recycling the waste nylon into new tiles.

Dutch technology giant Philips is increasingly positioning its lighting division as a lighting services provider, and in a recent move, Washington DC has switched all its carpark lighting to this model. Following this direction provides scope for Philips to boost its turnover via the use of efficient LED technology.

Walking the talk

Several companies are already embracing aspects of the circular economy. These include Mud Jeans in the Netherlands, which makes its product from a mix of organic cotton and recycled worn jeans. Options include leasing, purchasing, repair and swapping.

American clothing firm Patagonia aims to maximise durability and also runs the largest repair facility of its kind in North America, where 45 employees mend clothing that has been returned to the company. Together with eBay, it launched a remarkable anti-consumer program known as Common Threads, where customers are encouraged to buy used Patagonia products in preference to new.

Desso is a Dutch carpetmaker that has received Cradle to Cradle accreditation for its practices. All materials are recycled, reused or remanufactured, and all the energy used in production comes from hydroelectric power. It has chosen a similar service model to Interface.

Rype Office in the UK sells high-quality remade office chairs, sometimes for under half the price of a similar new product, and offers both lease and buy-back options.

Kingfisher, Europe’s largest hardware group, has a goal of introducing by 2020 1000 product lines associated with closed-loop processes. To help facilitate this, it intends to motivate customers, often via incentives, to return items at the end of their lives.

Martin Oliver

Martin Oliver

Martin Oliver writes for several Australian holistic publications including WellBeing on a range of topics, including environmental issues. He believes that the world is going through a major transition and he is keen to help birth a peaceful, cooperative and sustainable reality.

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