More and more people are starting to educate themselves on the topic of climate change, as it is important that each of us play our part. However, the economy plays a big role in global warming and it is one of the main factors to consider when countries are devising plans to reduce their CO2 emissions. If you’ve ever attended a conference, read a book or listened to a podcast about climate change, chances are you’ve heard about the term “circular economy”. But what exactly does it mean?
What is a “circular economy” and what are its benefits?
The definition given by the Ellen MacArthur Foundation, a global thought-leading charity focusing on bringing the circular economy into the agendas of decision-makers, states that “a circular economy aims to redefine growth, focusing on positive society-wide benefits. […] Underpinned by a transition to renewable energy sources, the circular model builds economic, natural, and social capital. It is based on three principles: design out waste and pollution, keep products and materials in use, regenerate natural systems.” A more palatable definition is given by Eurostat: “A circular economy aims to maintain the value of products, materials and resources for as long as possible by returning them into the product cycle at the end of their use while minimising the generation of waste.”
This can sound especially remote when considering the current ‘take-make-waste’ extractive industrial model, a “linear economy” that culminates in extensive waste production. Just in 2018, 5.2 tonnes of waste were generated per EU-27 inhabitant, but only 38.1% were recycled. Energy and extraction caused the third-highest amount of waste of 91.6 millions of tonnes in the EU in 2016. These figures are almost unfathomable and absolutely concerning, yet most people are not aware of the severity of the issues that the current economic model is causing.
Firstly, taxpayers in the EU pay around 5 to more than 100€ per tonne of waste, depending on the country.
Secondly, waste disposal is often carried out through incineration, which produces harmful gases (such as CO2). These contribute to the greenhouse effect, where gases accumulate in the atmosphere and trap heat from leaving the Earth, causing global temperatures to rise. Further problems might also be caused, such as the disruption of ecosystems and pollution, and the problem of the future exhaustion of raw materials in the future.
The current economic model enriches extractive industries, like oil & gas and landfill owners, in spite of consumers, taxpayers, and the environment.
This is why the circular economy model has been gaining traction. However, one common misconception is that reducing waste and switching to renewable resources would be too expensive for companies. To investigate that, McKinsey & Company did a study in collaboration with the Ellen MacArthur Foundation, which demonstrated that “such an approach could boost Europe’s resource productivity by 3 per cent by 2030, generating cost savings of €600 billion a year and €1.8 trillion more in other economic benefits”. As for employment, the study also found that implementing circular economy practices could lead to the creation of 580,000 jobs in the EU alone, and bottom line, consumers will also be provided with more durable and innovative products that will increase their quality of life and save them money in the long term.
So what has the EU been doing to shift our economy into this more favourable model?
The EU’s “Circular Economy Action Plan”
In response to global pressure led by climate change activists, the European Union devised a set of policy initiatives, the “European Green Deal”, with the main scope to make Europe carbon neutral by 2050 and ensure that economic growth is decoupled from resource use. Within this initiative, one of the main blocks is the “Circular Economy Action Plan”, devised in 2015, which aimed to transition the local economy from a linear to a circular model.
It includes 54 actions covering the whole cycle of materials and products – from production and consumption to waste management and the market for secondary raw materials. As of January 2019, more than 90% of actions have been delivered.
As part of the EU’s Circular Economy Action Plan, 10 billion euros are going to be invested over 5 years (2019-2023) in companies and start-ups focusing on helping the transition into a circular economy model.
An example is “Aeropowder”, a London-based start-up which aims to create useful materials from waste that already exists in society: feathers. We consume over 134 millions of chickens every day, and the poultry industry generates over 10,000 tons of feathers per day, which is considered as waste. Aeropowder has been able to transform chicken feathers, which, thanks to their microscopic structure, are one of the lightest natural fibres in nature as well as excellent thermal insulators, into a thermal packaging material which can be used to replace conventional polystyrene packaging and enable more sustainable deliveries.
A lot of initiatives regarding ‘closet renting’ are also coming forward, one of which being Fjong, Norwegian start-up which allows customers access to more than 4,000 new and vintage designer women’s clothing from over 200 brands worldwide. This allows customers to access many beautiful clothing items for a fraction of the cost, while simultaneously further discouraging ‘fast fashion’ (see next paragraph).
Circular economy in the fashion sector
The fashion sector (mainly clothing and textile industries) is one of the most globalised sectors, and among the main causes of waste globally. Nearly 20% of global wastewater is produced by the fashion industry and in the EU, approximately 16 million tons of textile municipal solid waste was generated in 2015. Worse yet, the amount of textile waste has doubled over the last 20 years.
Needless to say, the fashion industry follows a very linear economic model: clothes are often manufactured using unrenewable sources, exploiting large amounts of raw materials and underpaying workers, so that the cost per item can be extremely low and get the customers to buy more units. The quality and durability of the items are not priorities for most manufacturers; rather, if the quality is not optimal, the clothing item will wear out quickly and the client will be forced to buy another item. This vicious cycle, coined ‘fast fashion’, focuses heavily on following current trends, so that the popularised items for every season are mass-produced and sold at low cost until the next season brings new trends and the cycle starts again. This is not a sustainable practice and activists are preaching the need for change.
So how could a circular economy model be encouraged in the fashion sector? Firstly, there would need to be a revolution of the business model, which focuses on manufacturing high quality, affordable, durable clothing which provides broad functionality. It is also necessary that, once the clothes are no longer able to be worn, they can be recycled; it is crucial to make sure that design aligns with recycling processes that are available today.
Another alternative gaining popularity is rental models: many rising start-ups allow the public to rent clothes for a fraction of buying cost, as shown in the above example (Fjong).
Undoubtedly, moving from a linear to a circular economic model would create beneficial consequences for both companies and consumers, not to mention the environment. Despite the project being relatively recent, the EU is already recognised as a leader in circular economy policy-making globally. The action plan has also encouraged at least 14 member states, eight regions, and 11 cities to put forward circular economy strategies.
The European Union leading by example, we can only hope that the other governments will follow suit and work towards a more sustainable global economy to the benefit of the Earth.