Potential Benefits of a Circular Economy - Term Paper Example

What is a circular economy, what are some of the key principles, concepts and building blocks and what system shifts might be needed to bring it about at scale? Contents Contents 2 Introduction 3 Discussion 3 Conclusion 10 References 11 Introduction The circular economy is a term that is used for describing a particular form of industrial economy in which there are two main types of flow of materials which are the technical nutrients and the biological nutrients. The technical nutrients are designed for the purpose of circulating at high quality but without entering or harming the biosphere in any manner. On the other hand, the biological nutrients are designed with the purpose of making the materials re-enter into the biosphere in a safe manner. The main principle of the circular economy is to develop a type of industrial economy that is by intention or by design, safe towards the biosphere and is restorative in nature. This report deals with the analysis of a circular economy by considering the main principles and challenges associated with this kind of economy, by assessing the benefits and need of this kind of economy and by discussing how this economy has already been implemented by some nations cross the world. For this purpose, evidences are drawn for Jamaica and the Caribbean regions to understand the exact proposition and need of a circular economy. The report is suitably concluded by highlighting and summarizing the key findings and supporting the arguments as presented in favour of the need to shift from the traditional industrial economy framework to a circular industrial economy framework. Discussion The circular economy can perhaps be best explained by drawing a parallel of this economy with the traditional linear economy that is currently existent in the industrial domains. In the current economic system, the companies and industries tend to extract resources from the ecosystem at an accelerating pace and then use them into the manufacturing and production processes to make products that are usually disposed after some time of use (Lowitt, 2008). This approach seems to be efficient from the perspective of an organization or an individual. However, if observed from a global and holistic view, then this approach would seem to be highly unsustainable and hazardous for the future of the ecosystem and the planet (McDonough, Braungart and Clinton, 2013). Therefore in order to help the organizations, ecosystem and the industries to survive, an economic system should be developed that would operate within the natural and planetary boundaries. The concept of the circular economy is developed on the basis of the idea of decoupling the prosperity and growth of the organizations and industries through the use of the ecosystem and natural resources with the concern for the ecosystem and the communities (Lowe, 2004). This can be done by feeding back the untapped resources, components, materials and products back into the natural value chains so that a healthy and naturally balanced economy can be developed. This economy uses the approach of closing the resource loops and feeding the resources back into the ecosystem through the “cradle to cradle” concept in the organization of the society and businesses (McDonough and Braungart, 2002). However, the closing of the loops should be done by considering the ecological and social impacts of the actions of the organizations and industries and by using the renewable energy resources towards the aim of shifting to a circular economic construct (European Commission, 2014). There are six main principles of the circular economy which are used for changing the industrial systems and which should be taken into consideration of the development of this kind of economic structure. These are materials, energy, ecosystem, value, health and society (Figure 1). These factors should be interconnected with each other and the impacts of using each of these in the industrial processes should be considered while developing the circular economy framework. Figure 1: Six principles of the circular economy framework (Source: Circle Economy, 2014) The main goal of a circular economy is to generate a restorative type of economy in the industrial arena. The circular economy is developed as a way of moving away from the linear model used in the industrial processes and shift to a better model of economy that would add to the sustainability factor of the industries (Walter, 2013). The linear model framework as used in the industrial processes uses a simple structure of “take, make and dispose” which leads to unsustainability in the ecological systems in the long terms scenarios of industrial operations (Lee, 2012). The lifestyles that feed on the different materials used in the industrial processes often lead to major difficulties in surviving due to the depletion of the finite reserves that are used in the linear industrial processes model. The linear model leads to the creation of products that end up forming incinerators or landfills which degrade the ecological system of the planet (Europe Innova, 2012). This kind of realization instigated the process of the development of the circular economy model among different scientists including Mr Walter R. Stahel who is the founding father of the aspect of industrial sustainability (Stahel, 2012). The basic platform of the circular economy was coined by Stahel with the expression of “cradle to cradle” which denoted the management of waste in the circular economy with the ultimate aim of reducing wastage and integrating sustainable processes in the production and other industrial aspects (Ehrenfeld and Gertler, 2001). The circular economy denotes and economy of loops in which a number of factors are interlinked. These include economic competiveness and efficiency, employment opportunity creation, waste prevention and resource saving. The main goals of the circular economy were set as the development of reconditioning activities, long life products, product lifecycle management and extension and the prevention of waste materials so as to create a functional economy or a performance economy that that is expected to add value to the communities and localities in which the industrial process takes place (Gibbs, Deutz and Proctor, 2005). The framework of the circular economy takes insights from the ecological systems and natural systems. The circular economy considers the fact that our systems should ideally work like the natural organisms and process nutrients that can be again fed back into the biological arena. Under this framework, the industrial processes are based on processing technical and biological nutrients that can be again embedded onto the system so that a closed loop is formed for developing a restorative and regenerative form of industrial economy (Figure 2). Figure 2: Structural framework of the circular economy (Source: Mckinsey Global Institute, 2013). In a world which is expecting a population of 9 billion people by the year 2030, the need for using the finite resources and conserving these resources in an efficient manner acts as a huge challenge for all the different entities functioning in the industrial and others segments (Hansen, Braungart and Mulhall, 2012). The challenge of extending the resource base and resource supply to meet the continuously accelerating demands are also unprecedented in nature and need to be faced in a well-planned manner (Meyer, 2011). The current linear model of take, make and dispose is the cause of the formation of massive volumes of waste materials in the production processes which are continually adding to the environmental and ecological degradation of the world. The linear model as used in the fast moving consumer goods segment produces about 85% of the total material value of wastes that are lost in an irrecoverable manner per year (Botsman and Rogers, 2010). These kinds so redundant wastes and processes have led to the loss of material values due to which the commodity prices are increasing at a fast rate thereby erasing the actual price decreases that have been managed by the industrial; entities in the last 100 years. Therefore, the experts have taken up the circular economy as a way of restoring the ways in which materials are used and disposed as per the traditional linear economy. If the linear production model is used, the elements like iridium, indium, gold, tungsten, silver and many other key materials are likely to be totally consumed in the next 10-15 years (Hunt, 2013). These kinds of trends and issues have led to immense pressure on the companies, environmental workers as well as the business leaders to develop sustainable processes and achieve suitable hedging to avoid such kinds of risks for the business, societies, environment and the world as a whole. In such a situation, the circular economy acts as a system that enables the entities functioning in the different sectors to decouple the revenue values from the actual material inputs given into the production and other industrial processes (Allenby, 2006). The circular economy is necessary for the creation of continued sustainability, success and profitability of the companies an external business environment which is experiencing fast depletion of finite resources, increased concern towards environmental sustainability and value creation and economic development without harming the ecological systems, communities or the planet (Brinckerhoff, 2011). The circular economy is also expected to be value adding for the companies because the waste materials generated by the companies in the current linear industrial model lead to excessive harm to the environment as well as the people by the creation of health hazards, pollution, ozone layer depletion, greenhouse gas emission, global warming, carbon footprints and many other forms of hazards that can actually question the sustainability factor of the companies and industries (Ellen MacArthur Foundation, 2012). As such more and more companies are focusing on developing the circular economy for the purpose of reconciling the practical outlook for growth and sustainability with the environmental equity and prudence that are necessary in the current global scenarios. The various local and multinational organizations, national and international institutions and governments across the globe are focusing on the development of circular economies for the purpose of achieving inclusive, resource efficient, low carbon , green and sustainable economies across the world. Many initiatives like the SAMAO pathway are taken up as a means for calling upon different nations to contribute towards building up resilient economies and societies and shift towards a green economy that would help to achieve sustainability and equitability in the process of growth of the industries from different aspects like efficiency, employment, productivity, and social value addition. The Caribbean SIDs has started developing innovative practices and policies for managing the local foundation of their respective economies in a more efficient manner. These islands have been prominent entities in showing high commitment towards the creation of a green and circular economy that would help them to enhance their stewardship for the natural wealth, resources and the ecosystem (United Nations Environment Programme, 2015). However, the need for taking up the circular economy approach should not be limited to any particular area or nation but should be employed on a global platform through collective action of all the stakeholders and state governments so that the aim of developing higher sustainability and environmental compliance can be achieved in a globally uniform manner. Conclusion The circular economy is seen as a positive approach towards redesigning the future of the ecosystem and economies by developing industrial processes and systems that are regenerative and restorative in nature and intention. Thus, in the future, the use of the circular economy framework can ensure that the growth of the industries and economies are not made at the cost of the ecosystem and environmental health. At the same time, a circular economy would ensure the development of innovation, employment opportunity creation, and economic development. Thus, the potential benefits of a circular economy seem to be massive as compared to the liner economy that is being followed in the current global scenario. The employment of a circular economy is not only expected to lead to the sustainability of the companies and industries across the globe but is also expected to add more economic value and bring in higher profitability for the businesses across the globe. A circular economy framework is likely to be supported and employed by governments and businesses as a main way of developing a performance oriented and sustainable economy that would add value to the existence and functioning of industries and nations across the world. The circular economy adoption seems to be both a conscious and sustainable approach in the currents scenario of the global industrial environment. References Allenby, B., 2006. The ontologies of industrial ecology. Progress in Industrial Ecology, 34(1), 460. Botsman, R. & Rogers, R. 2010. What’s Mine Is Yours: How Collaborative Consumption is changing the Way We Live. London: Harper Business. Brinckerhoff, P., 2011. Accelerating the uptake of CCS: Industrial use of captured carbon dioxide. New York: World Economic Forum’s Young Global Leaders Sharing Economy Working Group. Circle Economy. 2014. Six principles to change the system. [Online]. 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