The idea of the circular economy has been gaining political and social currency recently as governments, companies, and citizens alike make plans for a greener, more sustainable recovery from Covid-19. In this factsheet, we take a look at what makes a successful circular economy, and why renewable energy is a vital component.

What is a circular economy?

Since industrialization, the dominant economic model around the world has been linear: raw materials are extracted, they are manufactured or consumed as a product, and then when they reach the end of their useful life, they are thrown away. This take-make-waste system places enormous strain on the environment by increasing the consumption of finite resources and creating huge quantities of polluting landfills.

In a circular economy, there is little to no waste and as much reuse and recycling as possible. When a product reaches the end of its life, instead of throwing it away, its materials are kept within the economy and converted into new materials that can be used again and again, creating further value.

Why do we need a circular economy?

The world’s largest economies are falling behind on commitments to meet the goals of the Paris Agreement, which aims to limit global warming to 1.5ºC. Despite pledges made recently during the US-led Climate Summit, research carried out by BloombergNEF shows that, across the world, not enough is being done to limit climate change, and unless something changes fast, we risk reaching the point of no return.

With existing technologies, we have the ability to address around 55% of global greenhouse gas emissions. These are emissions that come from the electricity and heat we use in buildings, from our electricity grid, and from transport.

But that’s only half the story.

According to the latest data, the production of materials we use every day accounts for 45% of the world’s total CO2 emissions, and only 8.6% of resources that enter the global economy are cycled back into it. Moving to a circular economy would reduce pressure on the environment, decrease pressure on the supply of finite raw materials, and lead to more innovation. What’s more, the World Economic Forum estimates that the transition to a circular model could be worth US$1tn to the global economy by 2025, and create 100,000 new jobs.

So far, climate pledges have focused on reducing the carbon intensity of the traditional economic model, but it’s clear that this won’t be enough. Adopting a circular economy framework today in steel, plastic, aluminum, cement, and food would remove 9.3 billion tons of greenhouse gas emissions by 2050. This is equivalent to eliminating current emissions from all forms of transport globally and would put the world well on track to a net-zero future.

What role does renewable energy play in a circular economy?

Reduce-reuse-recycle is only part of the picture. A truly circular economy has to be underpinned by a transition to renewable energy sources – for two reasons.

The first is arguably the most obvious: if the energy we use to power the overall system comes from finite resources that create waste, it will never be a real circular economy.

The second, though, is more complicated. Some evidence suggests that, although the circular economy is based around energy efficiency and a reduction in inputs, collecting, sorting, processing, and restoring materials back to reusable forms takes more energy than using virgin raw materials, which means that, in some areas at least, we may need more energy to make this happen – which is why it’s vital for the energy we use to come from clean, 100% renewable sources.

What role can companies play in fostering the transition to a circular economy?

In recent months, a growing number of international brands have begun to harness the power of circular supply chains and manufacturing. Last year, Nike launched an exploratory footwear collection made from 85-90% factory and post-consumer waste, while Ikea began a large-scale furniture buyback program on Black Friday, after committing to becoming 100% circular by 2030.

It’s not just consumer goods brands. We’re starting to see circular construction sites, where companies reuse existing local materials, transform them to extend their lifespan, and pool resources. In the automotive sector, we’re seeing OEMs explore ways of designing sustainable vehicles with recycled and recoverable materials, and looking to reuse batteries from electric vehicles. Even in the mining sector, companies are investigating ways of extracting resources from waste streams to increase the environmental viability of their operations.

All of these gradual adjustments are starting to combine into a systemic shift that builds long-term resilience, increases economic opportunities, and provides environmental and societal benefits.

The circular economy isn’t a ‘nice-to-have.’ To achieve UN Sustainable Development Goal 12 on sustainable consumption and production patterns, businesses must help it to become a reality.

Why is public trust vital in achieving a circular economy?

Trust is a very important factor in getting people to opt for change. We’ve seen this as part of the ongoing energy transition: the companies and people we speak to at Atlas Renewable Energy want to be certain that, by moving to renewables, they will not experience any loss of quality or reliability in their energy supply. But it goes further than that: generating public trust in the positive impact of any change – be that transitioning the grid to renewable sources of power or transforming the economy from a linear to a circular model – is vital to success.

When it comes to simple actions, such as recycling, the costs and the benefits tend to be in the same domain – the people who perform the activity are the same people who benefit from it. This makes these actions easy for the general public to get on board with. 

However, when it comes to wider trade-offs between local and regional or even global effects, it’s a little more difficult to get people to immediately understand the reasons behind the choices being made. Sometimes, reality can be counterintuitive, which can lead people to assume that positives – or negatives – exist, when in fact they don’t.

Fortunately, a well-established and internationally recognized framework to achieve this already exists. Life Cycle Assessment (LCA) is a tool we already use within the renewable energy industry, and by applying it to the circular economy, it is possible to test the impacts of circular business models, validate assumptions and get feedback for improvement, as well as help define targets and indicators.

Throughout the work we have done in communities, with different industries, and with numerous stakeholders, our experience has always been that we need to be able to prove our assertions in order to achieve buy-in, and we’ve done this time and time again through a consultative approach. 

By using science-backed methodologies such as LCA, companies and governments can be transparent about the upsides and downsides of transitioning to a circular economy, and enable the public to make evidence-based decisions on whether or not to support an initiative.

The time to shift to a circular economy is now

Our inefficient linear model is pushing our planet to the brink of a climate crisis, and depleting the resources we need to support our communities to build back better after the pandemic. It’s time to move towards a circular economy, with renewable energy as a central pillar. 

When it comes to creating this new, more sustainable future, no one company or even country can do it alone. Those at the forefront of the circular economy must continually measure their progress and clearly communicate the results of their efforts. By doing this, they not only build trust but also encourage everyone else to follow suit.

In partnership with Castleberry Media, we are committed to taking care of our planet, therefore, this content is responsible with the environment.*