A world where commercial skyscrapers and luscious forests could coexist sounds like
something straight out of a modern age fairytale, does it not? But what if it could be
completely real and possible? What if there is a system right in our vicinity that would
allow us to experience the sensation of freshly watered grass under bare feet while
witnessing massive industrial and technological developments all at the same time?
Then allow me to introduce you to the concept of a circular economy. A circular
economy is a model of resource production and consumption in any economy that
involves sharing, leasing, reusing, repairing, refurbishing, and recycling existing
materials and products for as long as possible. Through this essay, I aim to dissect
what a circular economy is, contrast it with a linear economy, discuss how it can be
implemented in everyday life and lastly state some examples of successful
implementations.
In order to explore the complex concept of circular economy, we must first understand
our current system i.e. linear economy. A linear economy is a system wherein finite
sources of raw material are exploited, goods and commodities are produced and used,
then subsequently disposed off instead of reusing or recycling. In contrast, in a circular
economy, materials never go to waste, instead they continue along the same cycle via
processes like maintenance, reuse, refurbishment, remanufacture, recycling, and
composting. In a nutshell, the idea of a circular economy is supported by the pillars of
the 3 R’s i.e. Reduce, Reuse and Recycle.
The model of a circular economy can be compared to “The Circle Of Life” for better
understanding. Organic matter may start off as a plant, which is consumed by a primary
consumer, the primary consumer is then consumed by the secondary consumer and so
on till the apex predator. After the apex predator dies, the same organic matter is
decomposed and integrates itself into the soil to once again start off as another plant. It
is important to note that over here, some energy loss may occur owing to energy needs
and the 10% rule, however the organic matter constantly stays in a cycle and never goes
to waste.
Note that, this is a self-made means of comparison and is by no means connected to
the circular economic model directly.
Now that the crux of a circular economy is well outlined, we may explore how it can be
inculcated at institutional as well as personal levels. There are various measures for the
same as suggested by Marlene Johler- a circular economy expert and Cillian Lohan- VP
for communication at the EESC ( European Economic and Social Committee). There are
broadly five business models along with examples with sub- categories for each of
them.
1) Circular Inputs: Circular inputs refer to employing renewable and reusable
sources of energy like bio-based sources of energy that may be recyclable or
recycled.
A great example of the same would be the carpet company DESSO, it minimized
its raw materials, made the yarn used in carpet production completely recyclable,
and lastly eliminated a myriad of toxins from its production process. Putting
these measures into practice DESSO was able to achieve an overwhelming 8
percent increase in profitability followed by another 8 percent increase in its
market shares.
2) As-a-Service business models: In this approach, the ownership of products is
retained by the company and the products utility is offered to the public at
nominal charges. Consider a smartphone company that retains ownership of its
devices while offering services such as messaging, email, and social media.
Through this method once a person is done using the smartphone the company
reacquires it and may render its services to another person or extract the raw
materials from the initial smartphone and employ them in creating another
smartphone. A remarkable example of a company that applied this model is
Signify or Philips light bulbs. Signify offers lighting as a service to its customers
on a monthly basis. It also maintains the bulbs and their fixtures and the most
impressive part is that most of the illuminating components and fixtures are
completely reusable and recyclable. The concept of Light as a service was also
implemented at Amsterdam Schiphol Airport, and the jaw dropping result
displayed that, energy consumption dropped by a whopping 50 percent when
compared to the old system.
3) Product Use Extension: This strategy implies keeping a product in the loop for
the longest time possible, for which three approaches have been narrowed down.
Once again, using the example of the smartphone industry will help us better
comprehend.
1) The smallest circle, repairing: Imagine you have a new smartphone, but
unfortunately, the screen cracks. In this situation, most people would opt for
repair and continue using the device.
2) The second smallest circle, resale: After some time, maybe a few years or a
few months you may be through with using your smartphone, in this case
most people would just stack it at home, however a better alternative would
be to pass it to a local electronics shop which would imply a second life for
the smartphone, therefore extending the time that it remains in the loop
3) Refurbishing or Remanufacturing: After your smartphone has already been
through two lives, its components would naturally be outdated. In this case it
could go for refurbishment wherein its outdated components would be
replaced and it would be made to look shiny and new, quite ready to go right
back into the market. Another alternative is Remanufacturing, this approach
usually applies to heavy machinery, turbines etc. Which insinuates putting a
product back into an ‘as new’ state. The ultimate example of the same would
be Caterpillar, through its Cat Reman program Caterpillar remanufactures
products like engines and motors and resells these at a 20 percent lower
price, while generating 50 percent higher gross margins, Entailing a pretty
good profit for the company.
4) Note that, only if these three circles cannot be employed, should a product go
for recycling.
4) Sharing Platforms: These platforms connect an individual or a business that has
an underused asset with an individual or business that requires that
asset but does not wish to own it. Taking a vehicle for instance, that you may
only use 10% of the time and for the remaining 90% it just lays around occupying
space, would it not be great if instead of paying to permanently own it but only
use it once in a blue moon, you could pay a nominal price to use the vehicle when
you require? An everyday example of a sharing platform that we all know and
love would be Airbnb.
5) Resource Recovery: A lot of waste materials are present during the production
process as well as at the end of a products life cycle, in resource recovery we try
to put these materials back into the loop. Bringing back the smartphone industry
for the third time, once your phone has lived all of its additional lives and is at the
end of its life cycle, it can be disassembled and its components can then be
recycled. A noble example of the same would be General Motors, this company
recycles a ginormous 84 percent of the waste it produces. This practice helped
General Motors earn an extra billion USD in revenue.
It is evident that circular economy is not only an economic opportunity for business
expansion and revenue increase but also a weapon of sustainability, if we work hard
enough to implement these business models and practices in our lives, our future
grandchildren may be able to enjoy nature as we do. According to Accenture Circular
Economy is valued at 4.5 trillion USD globally by 2030. Moreover, The Global Climate
Action Summit estimates the creation of over 65 million new low-carbon jobs by 2030
as well. If implemented properly this system has the ability to reduce carbon footprints
and toxic emissions significantly while raising profits and revenues and cutting on raw
material and production costs at the same time. Implementing a circular economy
clearly promises a plethora of possibilities and opportunities if we are willing to make
some changes.
For a brief consensus, we might be a long way from achieving a fully functional and
efficient circular economy, however we must realize that each step we take towards it
leaves an impact. Its implementation will require revolutionary changes at both
institutional as well as personal levels The path is not easy but is certainly worth it. And
finally, as PM Narendra Modi quoted “The world is witnessing depletion of all types of
natural resources. In such a scenario, circular economy is the demand of the hour, and we
must make it a mandatory part of our lives”
P.S. this essay won me a national contest 🙂