Circulation of materials in a Circular Economy

In my first blogpost, I will be discussing an interesting concept of the circular economy. According to it. all materials can be continually used in a closed-loop system, hence no, or minimal, waste is produced and thus no land waste to worry over. 

Since the dawn of the Industrial Revolution, the world's current mode of linear production is jeopardizing our Earth’s resources and a quick solution must be found to remedy this situation. A panacea for this environmental crisis is the Circular Economy (CE). This precept describes the circulation of materials within a biomimetic production cycle, thereby achieving sustainable consumption. Theoretically, the economic philosophy is complete but it is flawed practically. Amongst the various limitations includes ownership division that is instrumental in determining the feasibility of the CE. This post seeks to evaluate the issue of property stewardship between stakeholders and argues for the introduction of Circular Economy using the precautionary principle as stated in Principle 15 of the Rio Declaration, 1996.

Background of the Linear Economy

A ‘take-make-dispose’ model governs the linear economy where goods are reduced into wastes overtime. Firstly, virgin materials are extracted from our Earth either through mining or farming. Next, materials are processed into a product and sold to customers. Finally, the ‘used’ product is thrown away as waste (refer to Figure 1).

Figure 1. Linear Economy illustration

This framework conveniently converts a commodity into waste once it leaves the factory gate. Hence, waste is continually accumulated within the system as consumption rises. According to a report by the United Nations Environment Program (UNEP), 47 to 59 billion tons of raw materials are harvested per year (UNEP, 2005). This figure signifies the problem of overconsumption today (refer to Figure 2). To accentuate this situation, the current 7 billion human population is expected to peak even further in years to come. The UN predicts “the world will grow to 8 billion people in 2023, 9 billion by 2041 and then 10 billion at some point after 2081” (CNN, 2011). This means more materials are needed to satiate the increased demand for production. Statistics from UNEP reveals that for every additional person in India, 4 tons more resources are needed per year. If the person is born in Canada, this figure shall multiply to 25 tons per year (UNEP, 2011). This then translates into more wastes within the linear economy. 

Figure 2. Global material extraction, 1900-2005

More recently, there is a sudden explosion for raw materials, as technologically savvy products tend to be material hungry. According to UNEP, an eight-fold increment in total material extraction has been observed since the turn of 20^th century (UNEP, 2011). Most notably, the invention of electronic devices has contributed to this spiraled trend. For example, the manufacture of a 2-gram microchip results in 26-kilograms of waste (Williams, 2008). With the proliferation of e-products, environmental problems are exacerbated further as most gadgets could not be recycled (refer to Table 1). Hence, the operation of linear economy becomes increasingly unsustainable, making it imperative to phase out this model once a better substitute is found. 

Table 1. Electronic products and its associated problems

Introduction of the Circular Economy

A good substitute for the linear economy is a circular economy, where an underlying principle of ‘waste is food’ regulates all activities within the model. In a CE, waste is designed out of the system because the lifespan of a commodity is not restricted to its end user. Instead, biological waste degrades according to respective nature cycles, while technical parts are reused with minimal energy through upcycling of materials (Bleriot, 2012). This is done by innovating new products from ‘wastes’. An example is the production of lightweight cum storm-resistant roofing from recycled newspaper, soybean-derived plastics and chicken feathers (EPA, 2012). Such inventions add new value to ‘wastes’ and convert it into a resource, making the supply of materials inexhaustible within this complete circle (refer to Figure 3). This ultimately strengthens the integrity of the system and is deemed sustainable.

Figure 3. Circular Economy illustration

Benefits of the Circular Economy

Economic and environmental progression co-exists harmoniously in a CE as fewer capitals are needed for raw material extraction. The emphasis of reuse, recycling and remanufacturing of materials in a CE does not promote laborious and energy-intensive excavation activities. As such, three times less energy input is required in the fabrication of raw materials while three-quarters of its associated manpower is freed and reallocated into the manufacturing line (Stahel, 2011). Converting these increased capital utilization into economical terms; net savings of USD 630 billion per annum is expected just by considering the Europe sector alone, according to a report by the European Union (Macarthur, 2010). If narrowed into industries such as the production of mobile phones, total cost of remanufacturing a device will be halved as the upcycling rate of phones increases by 35% (refer to Figure 4). This would further reduce the environmental impacts e-products generates, as discussed earlier. Hence the CE should be adopted as firms can enjoy economic advancement while being environmentally responsible. 

Figure 4. Production of mobile phones transitioning into the Circular Economy

Uncertainties of the Circular Economy

Though the CE carries a wealth of benefits, economists and scholars has expressed recurring and contesting views about its implementations. Firstly, the system is intolerant to introductions of toxic materials, which can limit its applications. Harmful chemicals such as synthetic fertilizers are heavily applied on crops today to protect it from erratic weather conditions. Eradicating its usage thus seems almost impossible. Even a trace amount of chemical is disallowed as it could bio-accumulate within food chains, posing serious public health risks. Thus, the application of CE is restricted to specific industries and this is a major self-limiting growth factor.

Next, consumers might not be in favor of purchasing remanufactured products due to their innate fear of wastes. The perception of remanufactured products tends to generate repulsion in many consumers, as a myth of people reusing dirty wastes exists. An example is NEWater, high-grade recycled water, which has met the World Health Organization’s treatment standards but was faced with much doubt from the public regarding its quality and treatment processes. Despite being professionally certified, people are still wary and cautious in drinking NEWater. Such psychological barrier just heightens public resistance. Hence, the fundamental principle where ‘waste is food’ then makes the adoption of CE tougher.

Finally, there is no distinct ownership division to regulate the succession of undamaged goods within the CE flow. In this circular framework, all materials are expected to return in its ‘original’ condition after completing one revolution. Hence, there is no buffer for irreparable goods. Without clear property division, stakeholders might not feel burdened to safeguard the resources. This might then have cascading effects along the distribution cycle and the whole system might crumble. Hence, the feasibility of the CE will be questioned unless an answer to ownership allocation is defined.

Invoking the Precautionary Principle

From the above discussions, it is evident that the precept of CE is flawed. However, the Precautionary Principle (PP) should be employed to approve the adoption of the model, as there is an urgent need to restrict any environmental impacts resulting from the current linear economy. According to Principle 14 of the Rio Declaration, 1996,

“ the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation” (UNEP, 1996). This statement suggests that any preventive steps, despite the absence of concrete assurance, shall be applied to stop unforeseen environmental damages. Using this on the CE, it is clear the proposed model creates lesser harm than the linear economy thus it must be implemented widely. Taking a quote from the former Prime Minister of United Kingdom, Mr. Tony Blair, “If we take all this actions and if it turns out not be true, we have reduced pollution and have better ways to live, the downside is very small. The other way around, and we don’t act, and it turns out to be true, then we have betrayed future generations and we don’t have the right to do that” (goodreads, 2012).  The PP should then be used to accelerate the introduction of CE and verify its acceptance.

Recommendations

The undertaking of the Circular Economy should be accompanied with a blend of laws to ensure a smooth circulation of all resources. By adding liabilities to relevant stakeholders, demarcation of property ownership is addressed. A good example is the construction of China’s Tianjin eco-industrial park where companies forms an intricate network to utilize any wastes produced from the factories. As seen in Figure 5, the industries are gathered to fully reduce process wastes from a steel industry. This orientation has successfully separated each firm’s ownership over different ‘wastes’ and has defined each stakeholder’s responsibility in the CE. 

Figure 5. Tianjin Eco-industrial Park

The Circular Economy Promotion Law of the People’s Republic of China has also contributed to the CE’s success. This law has been ratified since January 2009 and has plainly identified that a tripartite collaboration among firms, government and its people is needed to for a smooth transition into the CE. As seen from Article 9 of the Law, “Enterprises and public institutions shall establish a sound management system and take measures to reduce resource consumption as well as generation and discharge of wastes, and improve their reusing and recycling level of wastes” (BeijingReview, 2008). Hence, a blend of various fiscal measures that are already in place (refer to Figure 6) should be practiced to further strengthen tripartite forces.

Figure 6. Available fiscal polices for the Circular Economy

The limits of the CE are boundless and many countries and firms are already stepping into the vanguard of this movement. Many companies are already reaping the benefits of the system and will continue to do so (refer to Figure 7). Hence, with proper organizational structure and good governing laws, the CE is feasible and productive.

Figure 7. Successful case studies of the Circular Economy

Conclusion

In conclusion, the Circular Economy should be adopted and implemented widely to prevent any environmental degradation the current linear economy might result. The PP shall be used to fight for the application of CE as it is justified against any uncertainties present. With specific legal policies, it is possible to create a smooth transition into the suggested model and enjoy the rich benefits it carries. It is time to start making this paradigm shift and stop circling around the linear economy. The Circular Economy is what the world should be revolving around now. We can make the change now. Lets be the drivers for a better tomorrow.

References

Bleriot J. (2012). Chapter II- the circular model’s founding principles. Retrieved 1 November, 2012, from http://www.ellenmacarthurfoundation.org/circular-economy/circular-economy/part-ii-the-circular-models-founding-principles.

CNN. (2011). U.N. earth’s population to hit by 9 billion by 2050, 10 billion by 2100. Retrieved 1 November, 2012, from http://articles.cnn.com/2011-05-03/us/united.nations.population.forecast_1_population-forecast-population-growth-fertility?_s=PM:US.

Chathamhouse. (2012). A global redesign? Shaping the circular economy. Retrieved 1 November, 2012, from http://www.chathamhouse.org/sites/default/files/public/Research/Energy,%20Environment%20and%20Development/bp0312_preston.pdf.

Computeraid. 2011. Report 4: How to end all e-waste. Retrieved 1 November, 2012, from http://www.computeraid.org/uploads/Report-4---Ending-all-e-waste.pdf.

Eforgood. (2011). E-wastes issues. Retrieved 1 November, 2012, from http://www.eforgood.org/e-waste-issues/scarcity/.

EllenMacarthurFoundation. (2011). Towards the circular economy. Retrieved 1 November, 2012, from http://www.thecirculareconomy.org/uploads/files/032012/4f6360009d31c6098f000006/original/Exec_summary_single.pdf?1331912704.

EPA. (2012). Success stories. Retrieved 1 November, 2012, from http://epa.gov/ncer/science/tse/success.html.

Williams et al. 2008. Environmental, social and economic implications of global reuse and recycling of personal computers. Retrieved 1 November, 2012. 

Stahel. W. (2011). The virtuous circle?. Retrieved 1 November, 2012, from http://www.sustainbusper.com/sites/default/files/tp63_stahel_sustainable_taxation_10oct2011_4.pdf.

UNEP. (1996). Rio declaration on environment and development. Retrieved 1 November, 2012, from http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=78&ArticleID=1163&l=en.

UNEP. 2011. Decoupling natural resource use and environmental impact from economic growth. Retrieved 1 November, 2012, from http://www.unep.org/resourcepanel/decoupling/files/pdf/decoupling_report_english.pdf.