The Circular Economy is Not "Recycling on Steroids"

Written by Kruti Munot, with Pavithra Mohanraj and Priyal Shah as part of a series with Infinitive. Cross-posted from Linkedin. 

Over the last year, we’ve discussed ideas around the circular economy (CE) with a range of people - from students and mentees, to companies and government stakeholders. When we start introducing the CE, the most common response is “do you mean better recycling?”

But (in the words of Ken Webster), viewing the circular economy as simply “recycling on steroids” ignores some of its most powerful aspects. This post is an attempt to demystify what the CE really is (and isn’t) - based on conversations we’ve had with multiple stakeholders from our work at Infinitive.

Q: Plastic bottles are recycled. Isn’t that part of the circular economy?

It is circular to recover waste and put it back into production, but very few materials actually get recycled this way. Most are “down-cycled” into products of lower quality and functionality. Ultimately, after a few rotations, that plastic will end up in the landfill or ocean.

Recycling slows the process of something ending up as waste (often using resources intensively in the process), but the CE looks to address the issue of why this waste exists in the first place. 

In a truly circular system, recycling isn’t the go-to choice, it is the last resort after a material has already been through multiple cycles of use (at its highest value), and is still of optimal quality to be recycled.

Q: Does the CE mean we repair and reuse things (forever)?

 

Not necessarily. Think of the car that’s been over-repaired to stay on the road for years, guzzling diesel and spewing pollutants. Or the refrigerators that have been repaired to work for over twenty years, but use over 60% more energy than a newer model.

Energy star labels on appliances often have validity periods on how long the product is efficient until. Sometimes it is more prudent to identify when it is time to replace a product (and re-introduce its components back into the production cycle, maintaining their value), than over-repair it.Repair and reuse is circular when it is economically viable, considers externalities, but most importantly, continues maintaining material value at its highest. For instance, IoT and intelligence embedded into innovative products (such as modular cars) can indicate when (and which component) needs to be repaired, or has been used at its highest quality and needs replacement. Repairing is one way to maintain high material value and stay circular, but with certain restrictions.

Q: Is circularity finding the best end-of-life option - recycling vs repair, reuse, etc.?

Recycling, repairing, remanufacturing (and all of the other R’s bandied about) at the end of a product’s life are all components of the circular economy when done right - but they still miss out its most powerful aspect.

The circular economy isn’t just about the end-of-life.

A product’s design and materials dictate how and when waste is created along the entire life cycle. Being circular means that we design and pick materials such that at the end of a product’s life, we don’t consider it “waste” but can reintroduce it into a new cycle.

The circular economy finds interventions at each step of the life-cycle: starting from design through to materials, to selling, and using products. End-of-life is simply one of these considerations, but circularity is about designing and innovating on business models that use resources efficiently.

Q: The sharing economy is a business model that uses resources more efficiently. Is it circular?

A sharing economy system isn’t circular when new materials and resources are introduced only to be added on shared platforms. In some cases, it can have rather dire unintended consequences - China now has heaps and “graveyards” of new bikes that had to be dumped after the failed introduction of a bike sharing system.

The sharing economy is part of the circular economy when it maximises the utility of existing resources. The core issue that the sharing economy solves is that we have excessive resources lying unused for long periods of time.

Like all circular solutions, it is essential to consider the key problem, and how the solution addresses it keeping in mind the wider systemic and infrastructural support required to make it work. A sharing platform may be well suited to certain contexts, while other models such as product life extension through modularity or circular supply procurement would be better suited to other contexts to maximise resource efficiency.

Modularity in cars (with upgradable software and hardware) can complement car sharing platforms

When we delve into micro details, the CE seems like just new jargon for sustainability and recycling. However, the essence of the CE is its systemic perspective. There isn’t one silver bullet to embed circular economy in the business model. While conversations often tend to break down the circular economy framework into its different components such as the 6R’s, the CE is much more than the sum of its parts.

The CE is restorative by design, and keeps material value at its highest at all times. Recycling, repairing, sharing, and its other components are different ways of breaking the concept down and begin transitioning - but a truly circular approach will depend on the context and system that it is built around.

While all this sounds great in theory, why would a company really bother innovating business models and design circular products that stay in use longer?

Companies that traditionally made most of their revenues from product sales and repurchases are already exploring new business models: such as Philips offering “light as a service”, and Motorola making their phones easier to repair.

As resources for making new products start becoming constrained, it makes long-term business sense to switch revenue models from those based on an abundance of resources, to those based on keeping the same resource in circulation efficiently for longer.

Companies can do this by keeping ownership of the resources used in the product, by providing it as a service or introducing a product take-back scheme. The circular economy encourages a rethink of how we buy and sell products with innovative business models that use resources more efficiently, while safeguarding long-term value for the company.

There are interesting collaborative efforts already in motion - such as in the smartphone industry where a (modular) phone manufacturer can engage with not only repair operators and telco operators, but also researchers and innovation hubs to unlock opportunities for circularity.

While several businesses are taking small steps towards circularity, there are hardly any “fully” circular business at scale today. A circular economy cannot be pieced together by a single company by engaging with circular approaches across the lifecycle. In order to achieve a completely circular business model, we need systemic change and wide collaborations across companies, sectors and regions.