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Circular Economy

How is a circular economy different from a linear economy?

A circular economy differs from a linear economy in a fundamental way. The main differences are found in the step plan that is followed, the perspective on what sustainability is, and the quality of reuse practices.

Step plan

A linear economy works according to the ‘take-make-dispose’ step plan. Resources are extracted and products are produced. Products are used until they are discarded and disposed of as waste. Value is created by maximizing the amount of products produced and sold.

A circular economy works according to the 3R approach of “Reduce, Reuse & Recycle”. Material extraction is reduced where possible by using less material. Products are made of reused parts and materials and after discarding a product, materials and parts are recycled. In a circular economy value is created by focusing on value retention. By keeping material streams as pure as possible during the complete value chain, the value of this material is retained. Pure materials streams can be used multiple times to provide a certain functionality or service, while only making one investment.

Sustainability through eco-effectiveness or eco-efficiency

In a linear economy sustainability is improved by focusing on eco-efficiency. This entails maximizing the economic gain which can be realized with a minimized environmental impact. This negative impact per economic profit gained is minimized in order to postpone the moment at which our system is overloaded.

In a circular economy sustainability is improved by enhancing the eco-effectivity of the system. This means that next to minimizing the negative impact of the system, the focus is put on maximizing the positive impact of the system by radical innovations and system change.

Braungart, McDonough & Bollinger, 2007

Quality of reuse practices

The main difference between eco-efficiency and eco-effectivity lies in the quality of reuse.

In a circular economy reuse is intended to be as high grade as possible. A residual stream should be reused for a function that is equal (functional reuse) or of a higher value (upcycling) than the initial function of the material stream. This ensures that the value of the material is retained or enhanced. For example: concrete can be grinded into grains that are used to create a similar wall as before. Or even a stronger constructive element.

Within a linear economy, reuse is mainly seen in downcycling practices: a (part of a) product is used for a low grade purpose which reduces the value of the material. This complicates the reuse possibilities of the material in a third life. For example: concrete is shredded and used as road filament.

Bocken, Bakker & De Pauw, 2015, Ellen MacArthur Foundation, 2014

100% circular

Matter has the tendency to dissipate (according to the 2nd law of thermodynamics). This is why there will always be value losses: The quality of materials and energy reduces when it is extracted and used, because the degree of order decreases (entropy increases).

For example, one kilo of gold which is molded in one piece can be used directly, and is more valuable that one kilo of gold distributed over microchips in mobile phones spread over all of Europe. Localizing, separating and melting the gold out of these microchips in to one pure stream of gold is not that easy. It increases the risk of material losses, decreases the quality and functionality of the material, and costs money and labor. Thus, there will always be a loss of ‘value’, which means the need for new ‘input’ remains necessary. In other words: a 100% closed loop circular economy is not possible.

This does not mean that the economy has to remain linear. In our current linear economic model, many elements are already made circular. These include reduced raw material extraction, increasing recycling, changing business models from product to service and other methods of financing. By circulating matter and energy through the economy, the demand for “new” input is decreased and the speed at which the entropy increases delayed.

Andersen, 2006; Ellen Macarthur Foundation, 2013a; Ellen MacArthur Foundation, 2014 

  Linear Circular
Step plan Take-make-dispose Reduce-reuse-recycle
Focus Eco-Efficiency Eco-Effectivity
System boundaries Short term, from purchase to sales Long term, multiple life cycles
Reuse Downcycling, Upcycling, cascading and high grade recycling.