Circular economy

The pressures of population growth, economic growth, and climate change are placing stress on global resource use within our planetary boundaries. In 2018, we reached Earth Overshoot Day, the day that humanity has consumed more of nature than can be renewed in a year, on August 1st. By contrast, in 2008 Overshoot Day fell on August 15th.

Global waste production has risen tenfold over the last century, straining landfills and polluting ecosystems. Demand for raw material of all types looks set to intensify as the growth paradigm continues and millions of people experience rising purchasing power. At the same time, growing demand for transparency and ESG reporting - from buyers, consumers and regulators - is pushing businesses to delve into their supply chains and understand their resource demands and impacts. Brands are setting ‘zero waste’ targets, while consumer interest is rising in zero waste lifestyles.

In response, global markets and supply chains have begun to embrace the idea of a circular economy: one in which waste is designed out of the system and both technical and biological material remain in use by making their way back through the economy. Such thinking is a significant shift away from a linear economy, which operates according to a ‘take, make, and dispose’ model.

Accordingly, innovations in materials science and designers for the full lifecycle of products and larger projects (such as the built environment) are in high demand. From textiles to food to construction, the unwanted outputs of one value chain are becoming the feedstock of another, or are fed back into the original system, creating loops. While the idea of the circular economy is not new, it has become mainstream in the last few years with a particular focus on materiality. For example, French automaker Renault sources 36% recycled materials for new car production thanks to progress in metals recovery and recasting, life-cycle design, and investments in connecting supply chains.

Read the full description+

Current trajectory

  • Human systems currently use resources at a rate 50% faster than they can be regenerated by nature. By the early 2030s we are projected to need more than two planets worth of resources to meet demand, compared to half a planet’s worth in the 1960s. 
  • Resource demand from emerging markets in the last 10 years – particularly in Asia – has reversed the price declines of the 20th century. For example, after declining throughout the 20th century metal prices jumped 176% from 2000 to 20141, with China now producing nearly half of the world’s steel.2
  • Markets for consumer electronics, solar PV installations, energy storage systems, and electric vehicles are growing rapidly, leading to a pronounced increase in demand for lithium, cobalt, nickel, manganese, graphite, copper and aluminium required for battery production. Furthermore, research indicates that Lithium-Ion markets are expected to grow by more than 12% from 2018 to 2024.3
  • Innovations in materials such as bio-based and biodegradable plastics are rapidly changing global supply chains and recycling markets. Bio-based and biodegradable plastics have risen to 2.04 million tons produced in 2017 with a 20% forecasted market growth by 2022.4 Nano-cellulose, a whole new material set derived from wood pulp fiber, are competing with materials from steel, to plastic, to cotton.5
  • Money from minerals will be the main income for many of the world’s poorest countries, such as Zambia and the Democratic Republic of Congo, for the foreseeable future, dwarfing aid, debt relief and other forms of trade. 
  • Today, 80% of countries consume more biocapacity (e.g. cropland, fisheries, forests, etc.) than is available within their borders. 

Implications

The growing gap between demand and supply means that circular economy is part of a global economic shift wherein design, manufacture, sale, recycling, and resale are connected – the implications of which will touch every aspect of our lives.
 

Business Implications

Businesses which adapt to and invest in circular economic principles early will reap the benefits of a more resilient business model.  Everything from construction to food and beverage will be disrupted by a focus on circularity- on shifting value chains and keeping resources in the economy. Investing in closed-loop manufacturing will provide increasingly higher returns. Research from Accenture suggests that a circular economy could unlock $4.5 trillion of growth by 2030.1

Consumer attitudes towards planned obsolescence alongside rising material costs will require investments in not only circular designed products and services, but also in the infrastructure on which they depend. Fiscal incentives and innovative risk management strategies will be necessary for firms to capitalize on the enormous potential offered by circular economic business models. Businesses exhibiting circular economic principles will also benefit from branding opportunities and potential fiscal incentives available to early adopters.   


Socio-political Implications

Innovations in materials and life cycle design and manufacture will drive consumer acceptance and appetite for second-life and fully recyclable products. Resource scarcity will drive new tax schemes and further incentivize producers and consumers to adopt circular economic practices. Evolving life-cycle design and changing recycling markets will require significant infrastructure investment and supporting legislation, while also providing new economic opportunities (e.g., China banning the import of foreign waste). Additive manufacturing techniques, coupled with diminishing costs of small batch manufacturing and increased producer responsibility will shift how and where businesses source and supply, further changing market geographies. At the foundation of this economic shift will be a change in our understanding of consumption in general. Incoming generations may perceive the value of an object more fluidly, understanding ownership and product life-cycles very differently, which will further drive innovation in design and associated legislation. 

 

Environmental Implications

As resource scarcity requires us to tighten and eventually close the loop of production and consumption, businesses will be accountable for aspects of their business now considered externalities. It will become not only environmentally, but also economically wasteful to dispose of products which still have inherent value. This new economic model has the potential to drastically reduce and eventually eradicate materials being sent to landfill and littering of the environment, as well as minimise associated waste by-products in manufacturing. For example, a company which produces fishing nets will be incentivized to retrieve broken or disused nets for their inherent plastic value. Companies will lose economic viability by wasting valuable resources creating materials which consumers or other businesses simply dispose of or use themselves. As the cost of materials rises, so to will the cost of wasting ‘scrap’ in the production value-add chain and in landfills post consumption. This progression will drive waste eventually to zero, drastically reducing environmental impact from extraction to waste management. More regulation regarding resources and materials – both directly relating to environmental changes, and indirectly through taxation and similar types of incentives/disincentives – is likely to appear.

Contribute / add your thoughts here

Circular economy is an important concept in the construction industry. With a number of large infrastructure projects underway or in the pipeline in the UK, it is crucial that clients and contractors explore innovative ways to ensure the impact of their operations fully sustainable. However, it is now time to go beyond the circular economy concept and work to ensure, wherever possible, that outcomes have a net benefit for Natural Capital over the longer term (certainly beyond the duration of the construction activity itself). An example is those projects involving excavation of soil. Rather than see this as a problem to be disposed of, it should be viewed as an asset that can be used innovatively (e.g. in habitat restoration and creation activities) to achieve net positive outcomes for Natural Capital.
up
0 users have voted.
Please register or log in to comment.