Circular economy

A **circular economy** (CE), also called **circularity**, is a model of making and using resources. In this model, existing materials and products are kept in use for as long as possible by sharing, leasing, reusing, repairing, refurbishing, and recycling. The goal of this idea is to help solve big world problems like climate change, biodiversity loss, waste, and pollution. It does this by focusing on three main principles from the very beginning (at the design stage). The three principles needed to change to a circular economy are: first, to design products so they do not create waste and pollution; second, to keep products and materials in use; and third, to help natural systems grow back (regenerate). The circular economy is defined as the opposite of the traditional linear economy.]]

For the last ten years, the idea of a circular economy has been studied a lot by schools (academia), businesses, and governments. It is becoming more popular because it can help lower carbon emissions and the use of raw materials. It can also open up new business opportunities and, most importantly, make our way of using things (consumption) more sustainable. Governments see the circular economy as a way to fight global warming and as a way to help the economy grow for a long time. A circular economy can also help by connecting people and resources in the same area. This helps to reuse materials locally (at a "regional level"). As a core principle, the European Parliament defines the circular economy as "a model of production and consumption that involves sharing, leasing, reusing, repairing, refurbishing, and recycling existing materials and products as long as possible. In this way, the life cycle of products is extended."

In a circular economy, new business models are a very important part of helping to change from linear to circular ways. Different business models have been recognized that support circularity. These include "product-as-a-service," sharing platforms, and models that make products last longer, among others. These models try to use resources in the best way, lower waste, and create value for both businesses and customers. At the same time, they help to reach the main goals of the circular economy.

Businesses can also make the change to the circular economy. This requires companies to make big changes to their whole business models. Using circular economy principles often needs new ideas and plans. It also requires a complete change in how products are designed, what services are offered, and how things are sold. The goal is to create "long-life solutions," which leads to what are called 'circular business models'.

## Definition 
There are many definitions of the circular economy. For example, in China, the circular economy is pushed by the government as a "top-down" national goal. In other places, like the European Union, Japan, and the USA, it is a tool used to create environmental and waste policies from the "bottom-up" (starting at a local level). The main goal of promoting the circular economy is to separate economic growth from environmental damage. This means allowing an economy to grow without harming the environment. A full definition could be: "Circular economy is an economic system that targets zero waste and pollution throughout materials lifecycles, from environment extraction to industrial transformation, and final consumers, applying to all involved ecosystems. Upon its lifetime end, materials return to either an industrial process or, in the case of a treated organic residual, safely back to the environment as in a natural regenerating cycle. It operates by creating value at the macro, meso, and micro levels and exploiting to the fullest the sustainability nested concept. Used energy sources are clean and renewable. Resource use and consumption are efficient. Government agencies and responsible consumers play an active role in ensuring the correct system long-term operation." More broadly, "circular development" is a model for making and using things (economic, social, and environmental). Its goal is to build a society that can support itself (sustainable) and works in harmony with its environmental resources. The circular economy tries to change the economy into one that is "regenerative" (it renews or heals itself). This means it is an economy that finds new ways to lower waste and harm to the environment *before* they happen, instead of waiting to fix the problems later. This is done by designing new ways to use resources in the best way, so we no longer need to depend on resources that will run out. In comparison, a circular economy tries to change from a 'take-make-waste' system to one that is "restorative and regenerative" (heals and renews itself). It uses reuse, sharing, repair, refurbishment, remanufacturing and recycling to create a "closed-loop system." This lowers the use of new resources and the creation of waste, pollution, and carbon emissions. The circular economy's goal is to keep products, materials, equipment, and infrastructure in use for a longer time. This means we get more value from these resources. Waste materials and energy should become "input" (materials) for other processes. This is done through waste valorization. This means they can be used as a part for another industrial process, or they can become resources that help nature (like compost). The Ellen MacArthur Foundation (EMF) defines the circular economy as an industrial economy that is restorative or regenerative by its value and design. In a similar way, "circular cities" try to use circular ideas in city planning. They encourage the local reuse of resources and encourage ways of living that are sustainable for their citizens. In 2022 and 2023, less than 10% of the world's economic activity was circular. Every year, the world's population uses about 100 billion tonnes of materials. More than 90% of these materials are wasted. The circular economy tries to fix this problem by getting rid of waste completely.

The idea of a circular economy is linked to several groups of ideas, including industrial ecology, biomimicry, and cradle-to-cradle design principles. Industrial ecology is the study of how materials and energy move through industrial systems, which is a basis for the circular economy. Biomimicry means copying nature's time-tested patterns to design human systems. Cradle-to-cradle design is an approach that looks at the whole system of a product. It thinks about the product's entire life, from getting raw materials to getting rid of it at the end. It tries to create the least waste and use resources in the best way. These connected ideas all help to build and use the circular economy.

General systems theory, which was started by the biologist Ludwig von Bertalanffy, studies growth and energy in "open" and "closed" systems. This theory was later used in other areas, like economics for the circular economy. The economist Kenneth E. Boulding, in his paper "The Economics of the Coming Spaceship Earth," argued that a circular economic system is something that is needed to keep human life sustainable on Earth. Boulding describes the "cowboy economy" as an open system. In this system, people see the natural environment as having no limits. They believe there is no limit to its ability to give us resources or take in our waste.

Walter R. Stahel and Geneviève Reday-Mulvey, in their book "The Potential for Substituting Manpower for Energy", helped create the basic ideas of the circular economy. They described how using more human labor (manpower) could lower the need for activities that use a lot of energy.

Simple economic models in the past did not pay attention to the connections between the economy and the environment. In "*The Economics of Natural Resources*", Allan Kneese showed how resources will not last forever (are not endlessly renewable). He was the first person to directly (explicitly) use the term "circular economy" in 1988.

In their book *Economics of Natural Resources and the Environment* (1990), Pearce and Turner explained the change from the traditional linear (or "open-ended") economic system to the circular economic system. They described an economic system where waste from all stages (taking resources, making things, and using them) is turned back into materials that can be used again.

In the early 2000s, China added the idea into its industrial and environmental policies. The goal was to make these policies focus on resources, production, waste, use, and the whole "life cycle" of products. The Ellen MacArthur Foundation  was very important in spreading the idea in Europe and the Americas.

The idea originally spread because of three big events: raw material prices increasing very fast between 2000 and 2010, China's control of rare earth materials, and the 2008 economic crisis. Today, the climate emergency and environmental problems are causing companies and people to rethink how they make and use things. The circular economy is seen as one of the answers to these problems. There are several big ("macro") arguments for the circular economy. These arguments say that it could allow economic growth without using more natural resources. This separates resource use from economic well-being for a growing world population. It also reduces how much countries depend on other countries for important materials, lowers CO2 emissions, reduces waste, and creates new ways of making and using things that can create more value.

A special worry is the permanent loss of raw materials because of their increase in entropy in the linear business model. Entropy (disorder) starts to increase when waste is made during manufacturing. It increases more when materials are mixed and spread out as products are put together. This is followed by rusting (corrosion) and wear and tear when the product is used. At the end of the product's life, there is a very fast increase in disorder when all the different materials are mixed in landfills. Some critics say that supporters of the circular economy may exaggerate the good things it can do. These criticisms suggest that the circular economy has too many definitions to be clearly defined. This makes it a very general "umbrella concept" that is exciting but hard to understand and measure. Critics say that the studies on circular economy ignore many facts that are already well known. In particular, it forgets the law of thermodynamics that says you can neither create nor destroy matter. Because of this, a future with no waste, where all material "loops" are closed, and products are recycled forever is, in any practical sense, impossible. They point out that studies on the circular economy ignore a lot of what we already know from waste management and environmental economics. Specifically, it forgets the law of thermodynamics, which says that you cannot create or destroy matter. Because of this, a future with no waste, where all material "loops" are closed, and products are recycled forever is, in any practical sense, impossible. They point out that recycling itself uses energy and resources. They also say there is a limit to how many times materials can be recycled before they become low quality. Critics also question if it is even possible ("feasible") to use circular economy ideas all over the world. They say this is because supply chains are very complex and different countries have very different economic and political systems. Furthermore, critics argue that focusing so much on "circularity" might take attention away from other important ways to be sustainable, like simply using less stuff (reducing consumption) and making sure things are fair for everyone (promoting social equity). Also, some critics argue that the circular economy, as it is pushed today, is a 'neoliberal' idea. They say it helps keep the current powerful people in charge and continues unfairness (inequalities). They argue that focusing on "win-win" solutions and making a "business case" for being circular ignores the fact that we might need bigger, more basic changes to our economy and society. Finally, critics point out the risk of "rebound effects". This is when being more efficient (like through circularity) makes things cheaper or easier to get, which causes people to use more of them. This increased use can cancel out the good things the circular economy was supposed to do for the environment.

## Sustainability
The circular economy seems more sustainable than the usual linear economy. It reduces the use of resources, waste, and pollution. But some experts say this is too simple and ignores the complexity of real systems. For example, social sustainability is often not fully considered. Sometimes, other strategies like buying new energy-efficient equipment are needed. Research from Cambridge and TU Delft identified at least eight ways circular economy relates to sustainability. It also includes strategic management and potential reuse and waste management.

The circular economy covers products, buildings, infrastructure, and equipment. It uses both technical (metals, minerals, fossil fuels) and biological resources (food, timber, fibres). Renting products instead of owning them is another example. Recycling is widespread.

### Background
In 1966, Kenneth Boulding described a "closed economy" where resources stay longer, compared to an open economy.

In the 1990s, Tim Jackson promoted preventive environmental management and circular approaches.

### Emergence of the idea
Walter Stahel and Genevieve Reday in 1976 proposed an economy in loops, creating jobs, saving resources, and reducing waste. Stahel promoted longer product life and a service-based economy. 

China included circular economy in its 11th five-year plan (2006–2010). Ellen MacArthur Foundation popularized the concept.

Circular economy helps reduce dependency on cheap oil and supports low-carbon economy. Circular strategies could bridge half of the emissions reduction gap for COP21 1.5°C target.

### Moving away from the linear model
Linear "take, make, dispose" systems use resources and create waste. Circular economy treats systems like living organisms, keeping materials in loops. 

Walter R. Stahel promoted "Cradle to Cradle" instead of "Cradle to Grave". Steve D. Parker studied closed-loop agricultural systems.

### Cradle to Cradle
Cradle to Cradle design focuses on safe and high-quality products, not just recycling. Architect William McDonough widely implemented this approach.

### Levels of circularity ("R" models)
Several circular economy models use steps starting with "R". The original "Three R principle" is "Reduce, Reuse, Recycle" from the 1970s. The most detailed "10R principle" was developed by Jacqueline Cramer. The report looked at the economic and business potential of a circular economy. It uses product case studies and economy-wide analysis, showing benefits across the EU. It estimates that part of the EU manufacturing sector could save up to $630 billion in materials costs by 2025, stimulating areas like product development, remanufacturing, and refurbishment. Key building blocks for circular transition were identified: skills in circular design and production, new business models, skills for cascades and reverse cycles, and cross-sector collaboration. A case study from the automotive industry shows the importance of integrating circular models across product, process, and system levels. The International Labour Organization predicts global circular economy adoption could create 7–8 million additional jobs by 2030.

In the U.S., Ranta et al. analyzed drivers and barriers for circular economy using Scott's institutional framework. Indicators were categorized as drivers (support circular economy) or barriers (hinder it).

The waste sector could achieve net-zero emissions with circular approaches. Circular economy was highlighted at the 2024 COP29 in Baku, Azerbaijan. Azerbaijan also signed a Joint Resolution on global collaboration for efficiency and circularity.

### Circular product design and standards
Product design for durability, maintenance, repair, upgrade, remanufacturing, separability, disassembly, and reassembly is key for circularity. Standardization supports sustainable advantages for businesses and consumers. Standardization and compatibility improve multi-functionality and modularity. A "Product Family Approach" helps with commonality, compatibility, standardization, or modularization across products.

Emerging technologies should be designed with circular principles from the start, including solar panels.

### Design of circularity processes
Circular process design is crucial for health and sustainability. Much e-waste is recycled far from consumption sites, with low efficiency and negative health effects.

Recycling should reduce overall environmental impacts using a life-cycle assessment approach.

Mandatory certification for e-waste recyclers could incentivize high-quality processes.

Digitalization can improve efficiency and minimize waste.

### Circular business models
Initially, focus was on re-X technologies (recycling, remanufacturing, reuse), but implementation lagged behind capability. Stakeholder collaboration is key, shifting attention to business-model innovation. Rheaply, a platform for scaling reuse, supports circular business model transition.  

’ companies make this problem worse by encouraging people to buy more clothes more often. This “take–make–dispose” model leads to more than $500 billion of economic value lost every year and also has many negative environmental and social impacts (Business of Fashion, 2018). 
Environmental impacts include huge amounts of clothing going to landfills or being burned. Social impacts include pressure on workers and risks to human rights.

The documentary *The True Cost* (2015) explains that in fast fashion, low wages, unsafe working conditions, and factory disasters are often accepted because they are said to provide jobs for people who have no other options. This shows that fast fashion harms both people and the planet by following a linear system.

Many people argue that using a circular economy approach can help make the textile industry more sustainable. A 2017 report by the Ellen MacArthur Foundation, "A New Textiles Economy", lists four main goals to move towards a circular textiles system:
* phase out harmful substances and reduce microfiber release
* change how clothes are designed, sold, and used so they are not seen as disposable
* improve recycling by changing how clothes are designed, collected, and processed
* use resources more efficiently and switch to renewable inputs where possible

So far, only a small number of fashion designers and brands have fully taken the lead on circular practices. Some often-cited examples are Patagonia, Eileen Fisher, Nathalia JMag, and Stella McCartney. One example of a circular system within a brand is Eileen Fisher’s “Tiny Factory”. In this program, customers are encouraged to bring back their worn Eileen Fisher clothing so the company can repair, remake, and resell the items instead of throwing them away. There are similar initiatives in Europe, where several outdoor clothing companies run textile return systems that invite customers to bring back used garments for repair, redesign, resale, or recycling.  

In a 2018 interview, Eileen Fisher said that overconsumption is a major problem in fashion. She argued that brands “need to make less and sell less”. In other words, companies can still use creativity and create value, but should not constantly create more and more new products.

Circular business models in fashion also include clothing rental services. These start-ups are growing in both the EU and the US. They offer everyday clothes, maternity wear, and baby clothes for rent, instead of selling them. Some companies, like Palanta, use a “pay as you rent” model, while others, such as Rent The Runway and Le Tote, use monthly subscription models.

Both China and Europe are seen as leaders in building a circular economy. McDowall et al. (2017) argue that the Chinese view of the circular economy is broad. It covers pollution and many environmental issues together with resource and waste topics. Europe’s view is usually narrower, focusing more on waste, resource efficiency, and business opportunities. 

.

End-of-life buildings can be deconstructed instead of demolished. This means that buildings are taken apart carefully, so that construction elements can be reused in new buildings. This also frees up land for new development.

Modular construction systems can also support a circular economy. Buildings made from modules can be assembled, disassembled, and reused more easily in the future, and their components are usually easier to recover at the end of life.

On the operational level, circular approaches can include using reusable or natural materials. For example, crushed and cleaned walnut husks can be used as a hard, light, natural abrasive for cleaning brick surfaces. The abrasive grains from walnut shells can be reused several times.

Researchers have also started to measure how well circular economy ideas are being implemented in construction companies. A first attempt created a measurement scale for circular practices in a building company. 

Studies show that the circular economy in construction can create new jobs and support economic growth. 
According to Górecki, one possible new job role is a “circular economy manager” for construction projects. This person would be responsible for planning and managing circular strategies across the project.

### Automotive industry 
The circular economy is also starting to grow in the automotive industry. 
A case study in the heavy-duty and off-road industry 
This helps with eco-efficiency by “narrowing” resource loops (using fewer resources for the same output). However, to fully support a circular economy, it is also important to “slow” and “close” resource loops, for example by making products last longer and by reusing and recycling materials. This leads to eco-effectiveness, which looks at the whole system, not just single processes. 
The study finds that combining lean and circular approaches can unlock large potential benefits by focusing on products, processes, and the overall system at the same time.
* remanufacturing car parts, and
* improving the design of new cars so that they are easier to repair, reuse, and recycle. 

Remanufacturing is mainly used today for spare parts. A common example is the remanufacturing of gearboxes. A study shows that a remanufactured gearbox can reduce the global warming potential (measured in CO2-equivalent) by about 36% compared to a newly manufactured gearbox. 

In the EU, the vehicle recycling industry is able to recycle about 75% of each end-of-life vehicle. This means around 25% is not recycled and may end up in landfills. There is therefore still a lot of room to improve circularity in the sector.

In the electric vehicle industry, disassembly robots are being developed and used to help take apart vehicles and their battery packs for recycling. The EU’s ETN-Demeter project (European Training Network for the Design and Recycling of Rare-Earth Permanent Magnet Motors and Generators in Hybrid and Full Electric Vehicles) looks at how to design electric motors so that permanent magnets can be easily removed and the rare-earth metals can be recycled.

Some car makers, such as Volvo, are also testing new ownership models, like “Care by Volvo”, where customers lease cars directly from the company instead of buying them.

### Logistics industry 
The logistics industry is very important in the Netherlands because the country is in a key transit location where goods move every day. The Netherlands is an example of an EU country that is shifting towards a circular economy because its economy depends strongly on imported raw materials (for example from China). This dependence makes the country vulnerable to changing and sometimes unpredictable import costs for these primary goods.

Research on the Dutch logistics industry shows that about 25% of Dutch companies know about and are interested in the circular economy. For larger companies with more than 500 employees, this rises to 57%. Sectors such as chemical industries, wholesale trade, industry, and agriculture, forestry and fisheries see potential cost savings when they reuse, recycle, and reduce imports of raw materials.

Global freight transport is expected to grow in the coming years. This will increase environmental impacts and the global warming potential of transport, creating new challenges for the logistics sector.

These risks can be reduced by working on three main areas, which will always depend on local conditions:
* monitoring contaminants
* improving collection, transport, and treatment of waste and water
* updating regulations and policy to manage risks As part of this, it plans a shift to “circular agriculture”. The goal is to have “sustainable and strong agriculture” by around 2030. 

Some key points in this Dutch plan are:
* closing the feed–manure cycle (fodder-manure cycle)
* reusing as many waste streams as possible (a team “Reststromen” will coordinate this)
* reducing the use of artificial fertilizers and using more natural manure
* allowing farms in special “experimental areas” to deviate from certain laws and regulations to test circular practices
* using common and uniform methods to measure soil quality
* giving farmers the option to sign agreements with *Staatsbosbeheer* (the state forest service) so their leased land can be used for *natuurinclusieve landbouw* (“nature-inclusive management”)
* supporting initiatives that can increase farmers’ income

### Furniture industry 
In the furniture industry, most products are passive, long-lasting items. For this reason, strategies that extend product life—such as repair and remanufacturing—usually have lower environmental impacts and lower costs. 

Some companies, such as GGMS, support a circular approach by refurbishing and reupholstering furniture so it can be reused instead of thrown away.

The EU sees large potential for circularity in the furniture sector. Out of about 10,000,000 tonnes of furniture thrown away annually in the EU, most is sent to landfills or incinerated. By moving to a circular model by 2030, the EU could increase Gross Value Added by about €4.9 billion and create an estimated 163,300 jobs.

A study on Danish furniture companies shows:
* 44% of companies offer maintenance as part of their business model
* 22% have take-back schemes
* 56% design furniture so it can be recycled

The authors concluded that while circular furniture models in Denmark are growing, many companies still lack knowledge about how to make the transition, and changing their business model is often seen as a major barrier.

A report from the UK also sees a large potential for furniture reuse and recycling. It found that about 42% of bulky waste sent to landfills each year (1.6 million tonnes) is furniture, and that 80% of raw material used in the production phase becomes waste.

### Oil and gas industry 
Between 2020 and about 2050, around 600 oil and gas installations will have to be decommissioned in the UK sector of the North Sea alone. Over the next decade, about 840,000 tonnes of materials will need to be recovered, at an estimated cost of £25 billion. In 2017, North Sea oil and gas decommissioning became a net cost to the public, with UK taxpayers paying 50–70% of the total bill.

Because public money is involved, there is interest in finding decommissioning solutions that are best not only economically, but also socially and environmentally.

Organizations such as Zero Waste Scotland have carried out studies to identify parts and equipment that could be reused. Equipment might continue its life in other industries or be redeployed in the oil and gas sector itself.

### Renewable energy industry 
Oil and gas are not compatible with the idea of a truly circular economy, because they are finite resources and their use does not “meet the needs of the present without compromising the ability of future generations to meet their own needs”. 

A sustainable circular economy can only be powered by renewable energy sources such as wind, solar, hydropower, and geothermal energy.

Many entities today aim for “net zero” carbon emissions. This means they still use fossil fuels but offset some of their emissions by removing carbon from the atmosphere. While this is an important first step, some experts, such as smart grid technologist Steve Hoy, argue that a truly circular economy needs “true zero” instead of “net zero”. “True zero” means eliminating fossil fuel use completely and producing all energy from renewable sources.

The renewable energy industry itself is growing quickly. Building and maintaining renewable systems requires energy and raw materials. Even so, because fossil fuel power plants emit so much CO2, the total carbon footprint of renewable technologies over their whole life cycle is much lower than that of fossil fuel generation. 

However, many renewable systems are still designed and built in a linear way. For a fully circular economy, issues such as design for recycling, reuse of materials, and long-term resource availability must also be considered.

### Education industry 
In 2018, The Ellen MacArthur Foundation (EMF) identified 138 institutions worldwide that offered circular economy courses. Since then, circular economy topics have been added more and more to teaching programs, with plans for adoption at university, city, and even national levels.

Zero Waste Scotland is an example of a nationwide program that aims to include circular economy topics in the Scottish education system. Their “YES Circular Economy Challenge” promotes the idea that every learning environment should have a “whole-environment approach” to learning for sustainability. This means the approach should be strong, visible, assessed, and supported by leadership at every level.

Another study estimates the losses of 61 metals, and shows that the use lifetimes of many, often scarce, tech-critical metals are quite short. 

Using the Project Drawdown modeling framework, another study shows that, even without including the costs or practical limits of building out renewable energy generation, higher metal recycling rates can significantly help with climate change mitigation.

### Chemistry
Researchers have developed ways to recycle about 200 industrial waste chemicals into valuable drugs and agrochemicals. This kind of “upcycling” allows productive reuse of waste, reducing disposal costs and environmental risks.

Another study argues that for products used directly in the open environment, such as pesticides, we need new molecules and materials that are safer and easier to manage. These products often cannot be easily circulated or recycled, so they are a special challenge for the circular economy. The study provides guidelines on how to better connect chemistry with circular economy principles for such substances.

## See also
## References