The Essence of the Circular Economy and its Challenges

(Photo: Dailysabah.com)

Overshoot day is the day when humanity uses up all the natural resources’ capacity for the given year. We have reached that date systematically sooner for the past 50 years, consuming 1,7 times more capacity yearly than what the Earth could reproduce in 2022. If the whole world had the same consumption rate than the USA, we would use 5 times of the Earth’s biocapacity for a given year.

Our consumption produces around 2.1 billion tons of waste in a year, an amount which – loaded into trucks – could reach around the Earth 24 times. On the positive side, half of the EU’s communal waste was recycled or composted in 2016, halving the amount of landfilled waste per capita compared to its quantity in 1995. However, it should be added that China had imported waste from developed countries until 2018, but they gave up on their practice due to the challenges of recycling. The result of our waste production is such, that the mass of plastics floating in the ocean could exceed the mass of fish by 2050 (812 million tons). The vast majority of fish consume plenty of microplastics which humans might ingest indirectly, and we do not know its consequences so far. Thus, theories emerge occasionally regarding more efficient waste management and resource utilization: green growth, sustainable development. It is interesting to note that the concept of the closed-loop economy was reframed several times before it could fulfil its essence since its birth in the 70s, and the newly paraphrased ideas had never reflected on the success of their progenitors. The most popular theory connected to this topic in recent years is the Circular Economy. It can be seen that the soon-emerging massive purchasing parity of a new middle-class would challenge the Earth’s capacity in case of the same functioning of supply chains, so transition achieved not only in labels of the Circular Economy is highly recommended.

The aim of the Circular Economy is to minimize resource usage, waste, emissions, and loss of energy. It covers several activities needing a new workforce and resources: a product should be designed in a way to make it easier to disassemble and recycle at the end of its lifespan. More people should work in the recycling industry, withdrawing labor from other fields. Firms should guarantee a higher level of warranty: they should produce long-lasting products with better maintenance. Consumers could borrow and share more goods by applications, making the institution of private property fade. By a model like this, demand for virgin materials would decrease dramatically, which would be the only, but substantial, cost reduction effect of this system.

Despite all this, the concept of the Circular Economy does not mention a word about the thermodynamic fact that matter cannot be created nor destroyed: a circle – as a metaphor – could be an attention-raising buzzword, but new energy should be invested always in the circulation of matter. It might happen that even when the Circular Economy is fully implemented, increased efficiency would encourage more consumption since matter is thought to be in a circular system. This is called Jevon’s paradox. The Circular Economy ignores a factor that enables production, namely the economies of scale. An extension of capacity might make more specialized technologies economical. If produced quantity is reduced, it might be that reformative technologies cost more than what should be paid by consumers. In addition, more companies are interested in the economies of scale: in the age of open innovation, firms purchase technology from each other, furthermore, massively enlarged container ships in the last decades deliver products from several companies. So, even if one company begins circulating materials more efficiently, its cost is impacted by other firms’ production and transportation costs, therefore, overall interest points towards the economies of scale which needs production maximization. The question arises: can it be achieved while focusing on constant recycling, maintenance, and a high level of quality assurance?

As outlined above, many challenges must be considered if humanity wants to count on Earth’s biocapacity. Overshoot day reveals that involvement of the 3 billion emerging middle-class people, what is predicted by 2030, is not soluble by recent levels of technological and supply chain development. The cost of our well-being must be paid either by the Earth or by humanity by reforming its activities.