Circular economy: how it works and what are the benefits?

The circular economy is an attractive solution to the current linear model of consumption. The climate crisis, the depletion of resources, and the loss of biodiversity are some of the reasons that led us to reconsider the current throwaway model. The survival of the planet depends on finding environmentally friendly and sustainable alternatives. To this end, the circular economy recovers materials, restores them in the natural system, and uses non-harmful technologies to reduce the environmental impact of human activity. We explore this in more detail below.

What is the circular economy?

The circular economy is a model of production and consumption aimed at reducing waste to a minimum. To this end, we must share, rent, reuse, repair, renew and recycle existing materials and products. The ultimate goal is to extend the life cycle of products and keep them within the economy.

It is about finding an alternative to the current linear economy model based on “extract, produce and discard”. A model that is reaching the limits of its capacity. The circular economy involves firstly adapting products from design to be as sustainable as possible. And secondly, using renewable energy sources to support it. Therefore, the circular economy model is based on three main principles:

  1. Reduce waste and pollution through eco-design.
  2. Keep products and materials in use.
  3. Regenerate natural systems.

How does the circular economy work?

The circular economy is an economic model designed to “self-regenerate” and “reconstitute”. We say it is self-regenerating because there is feedback. That is, it takes advantage of the energy flows of materials and information instead of losing parts of their value throughout the economy. This value includes both labour and the energy used in its manufacture among others.

At the same time, we say that it is reconstituted because it relies upon the use of renewable energies. In this way, we seek to minimize and eliminate the use of toxic substances and eliminate the amount of waste we generate. The butterfly diagram by the Ellen Macarthur Foundation best illustrates how this circular flow of materials works:

1. Technical or “restorative” cycle

It aims to take advantage of the final product and avoid loss of value. It is based on:

  • Sharing: the collaborative economy is an effective way for users to contribute to extending the life cycle of products.
  • Maintenance: the product can be used more intensively while providing maintenance without having to transport or remanufacture it.
  • Reuse: recovers great value when used within the same business model. It allows products to be used more intensively, e.g. vehicles.
  • Remanufacturing: it is a system to restore the product to a new or better state. It is widely applied in the electronics and automotive sectors.
  • Recycling: should be a last resort. Recycling strips the product of all its extra value. Indeed, it loses all the value of the labour, energy, and resources that went into its manufacture.

2. Biological or “regenerative” cycle

It aims to return biological products such as clothing and food to the natural system. It involves:

  • Anaerobic digestion: it is a process from which we can obtain products such as fertilizers and energy so that they can return to nature. Besides, we can obtain Chemicals and other valuable materials from biological resources.
  • Cascade thinking: involves thinking of alternative products that we can obtain from a product other than reusing it. For example, from a wood product, we can obtain particleboard, fiber, biochemicals, and, ultimately, energy sources.

What are the advantages of a circular economy?

The raw materials economies need are extracted domestically or imported. We can process these materials into energy, such as fossil fuels, and other derivatives. As a society, we consume raw materials very quickly. For instance, in the case of packaging. In other cases, we use stocks, for example for electronics and construction. It is worth mentioning that the use of raw materials implies the generation of waste, emissions, and using recycling and recovery systems. Therefore, a circular economy can help mitigate the impact of our consumption patterns. The following are its benefits:

1. Reduces pressure on the environment

The circular economy leads to better waste management and more efficient use of energy, water, land, and raw materials. As a result, it significantly reduces greenhouse gas (GHG) emissions. The 2015 Action Plan for a circular economy in Europe estimates a reduction of CO2 equivalent emissions of more than 600 million tonnes by 2035.

2. Secures the supply chain of raw materials

The supply of raw materials involves several risks: price volatility, availability, and dependence on imports. In the case of the EU, they import the equivalent to about half of the resources it consumes. Resource depletion is therefore one of the major challenges of the current economic system. Moreover, the need for stocks of raw materials aggravates this problem.

Currently, stock materials are growing at a rapid pace. At this rate, we would still need a significant amount of inputs from raw materials to meet the demand. Even if 100% of discarded materials were recycled, according to EU data. Thus, a circular economy could help to optimize stocks and reduce the need for new materials. Especially, in metal-dependent sectors such as automotive, machinery, and transportation. According to McKinsey, a circular economy could bring global net material savings equivalent to between 110 and 170 million tonnes of iron per year by 2025.

3. Increases competitiveness and efficient use of resources

According to a study by the Ellen MacArthur Foundation, a shift in favor of the circular economy could reduce the EU’s annual net resource expenditure by €600 billion by 2030. A circular economy could benefit both businesses and consumers through savings and efficient use of resources.

4. Encourages innovation

The need to adapt to a circular economy implies rethinking the design of processes. It also means rethinking the use of raw materials and products. This need to adapt implies major opportunities for innovation in all sectors. Even in those sectors that are not considered innovative per se. A good example of this would be the automobile manufacturer Renault.

5. Contributes to job creation

The circular economy contributes to GDP growth and job creation, both direct and indirect. A study by the think tank Green Alliance on potential employment opportunities for Italy, Poland, and Germany estimated that ambitious measures could bring 270,000 people back into the labour market. This would also save governments around €3 billion a year.

An example of the circular economy: REVALUO system

The European Union alone generated 2.5 billion tonnes in 2016. Approximately 5 tonnes per capita. Estimates also warn global waste generation will continue to grow rapidly in the coming years. In some regions, it will even triple. Sustainable waste management is therefore one of the major challenges of the coming decades.

REVALUO is our low-carbon waste-to-energy system. WtE systems play a fundamental role in the transition towards renewable energy and the zero-waste model. Moreover, they are sometimes the only option to eliminate some types of waste. This is the case with plastics and tires. Here’s how our system fits into the circular ecosystem:

  • Recovers: REVALUO selects and recovers waste that can be recyclable or reusable. Metals, glass, paper, and cardboard are some examples.
  • Reuses: our system reuses the water and heat involved in the waste treatment. In fact, we reuse the distilled water for bioethanol production in each HYDROLYSIS process. On the other hand, we can power supply the treatment plant itself using the heat THERMOLYSIS treatment generates.
  • Transforms: REVALUO transforms waste into valuable products such as energy sources and other alternative products. We process both organic and inorganic matter. Also, we eliminate waste that otherwise could not disappear. Hence, we recover between 80 and 95% of waste in a totally clean way. Our system produces less than 4 g/h of CO2 per tonne in the process*.

Find out more about our alternative processes and products.

If you have any question or doubt, please contact us!

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