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Circular Economy

What is the definition of a circular economy?

A circular economy is an economic system of closed loops in which raw materials, components and products lose their value as little as possible, renewable energy sources are used and systems thinking is at the core. In this article we will explain this definition in more detail.

Movie clip by the Ellen MacArthur Foundation (2011) explaining the circular economy in an accessible way:

Development of the definition

More than 100 different definitions of circular economy are used in scientific literature and professional journals. There are so many different definitions in use, because the concept is applied by a diverse group of researchers and professionals (Kirchherr, Reike & Hekkert 2017). A philosopher of science emphasizes a different aspect of the concept than a financial analyst. The diversity of definitions also makes it more difficult to make circularity measurable.

Definitions often focus on the use of raw materials or on system change. Definitions that focus on resource use often follow the 3-R approach:

  • Reduce (minimum use of raw materials)
  • Reuse (maximum reuse of products and components)
  • Recycle (high quality reuse of raw materials)

Mobility can serve as a good example. Sharing cars, from companies such as MyWheels and WeGo, mean that fewer people have to buy their own cars. This reduces the use of raw materials (reduce). If the engine of a car is broken, it can be repaired or the chassis and interior of the car can be used to make or refurbish another car (reuse). When these parts can no longer be reused, the metal, textile and plastic of the parts can be melted down so that a new car can be made of them (recycling).

Three elements

According to Korhonen, Nuur, Feldmann & Birkie (2018), definitions that focus on system change often emphasize three elements, which are further explained below:

  • Closed cycles
  • Renewable energy
  • Systems thinking

Some researchers argue that social inclusiveness is also a necessary part of the circular economy (Korhonen, Honkasalo and Seppälä, 2018).

1. Closed cycles

In a circular economy, material cycles are closed following the example of an ecosystem. There is no such thing as waste, because every residual stream can be used to make a new product. Toxic substances are eliminated and residual flows are separated into a biological and a technical cycle. Producers take back their products after use and repair them for a new useful life (Ellen MacArthur Foundation, 2015a). In this system, it is therefore not only important that materials are recycled properly, but also that products, components and raw materials remain of high quality in these cycles (Korhonen, Nuur, Feldmann & Birkie, 2018).

2. Renewable energy

Just like raw materials and products, energy also lasts as long as possible in a circular economy. The circular economic system is fed by renewable energy sources. Because it is not possible to recycle energy, there is no mention of energy cycles or energy cycles, but of ‘cascade type energy flows’ (Ellen MacArthur Foundation, 2015a). An example of this is the co-production of heat and power.

3. Systems thinking

The circular economy does not only require closed material cycles and renewable energy, but also systems thinking. Every actor in the economy (company, person, organism) is connected to other actors. Together, this forms a network in which the actions of one player influence other players. To take this into account, the short and long term consequences must be taken into account in choices, as well as the impact of the entire value chain (Ellen MacArthur Foundation, 2015a).

Figure 1: Some of the elements of a circular economy mentioned above and others in relation to each other (Source: PBL, 2019)

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