Maria A. K. Sarwendah
Research Assistant in Center for World Trade Studies UGM
As novel as it sounds, the circular economy should not be perceived as a mere passing trend. The circular economy has long manifested itself as a solution to the prevailing linear economy system. Since the latter has been widely adopted to meet the skyrocketing global consumption demands throughout the 20th century, our society has grown accustomed to the traditional linear production flow of ‘take-make-dispose.’ Based on this flow, natural resources are firstly taken, transformed into consumable goods, and finally discarded as waste. Unfortunately, the same process also puts humanity’s survival at risk through its undesirable impacts on environmental, social, and even economic stability. These impacts are evident in products and waste over-accumulation, higher price volatility, ecosystem services’ erosion, and toxic emissions buildup due to unsustainable natural capital harvesting.
Conceptual Roots of Circular Economy
While the historical starting point of its terminology remains unclear, the circular economy conceptualization attempts have been prominently carried out since the 1970s. The term ‘circular economy’ itself finally surfaced in western literature in the 1980s.
Spacemen Economy
In 1966, Kenneth Boulding presented a futuristic depiction of the spacemen economy that views the earth as a closed and circular system with limited capacity.
“In the spaceman economy, what we are primarily concerned with is stock maintenance, and any technological change which results in the maintenance of a given total stock with a lessened throughput to sustain humans’ life (that is, less production and consumption) is clearly a gain”
To protect humanity’s survival, the system suggests to cut down the inputs for production and prevent waste occurrence by processing the outputs back into the production cycle. This concept is contrary to the open and linear ‘cowboy economy’ that measures economic success based on higher production and consumption quantity.
Performance Economy
In 1976, Walter Stahel and Geneviève Reday-Mulvey laid the groundwork of the performance economy by introducing the closed-loop economy concept. As a direct effort to implement Boulding’s ‘spacemen economy,’ the closed-loop economy views product-life extension activities as the key for saving both resources and energy. In addition, retaining ownership of products and selling their service is believed to be more effective in preventing waste and profit-loss than selling products. These activities would eventually lead to regional job creation and economic wealth.
“It would change economic logic because it replaces production with sufficiency: reuse what you can, recycle what cannot be reused, repair what is broken, remanufacture what cannot be repaired.”
Industrial Ecology
The circular economy is often linked to Industrial Ecology, a study that sees the industrial system and the environment as an inseparable joint ecosystem. To achieve sustainability, the flows of production and consumption should be directed to imitate the natural system by conserving and reusing resources. Industrial Ecology has been developed since the 1970s and set to operate at three levels: (1) firm-level; (2) across firms level; (3) regional/global level.
Cradle-to-Cradle
Michael Braungart and Bill McDonough developed the cradle-to-cradle concept that views ‘the conflict between industry and the environment as a design problem.’ Therefore, products should be redesigned to be restorative and reprocessed (as either biological nutrients to the soil or technical nutrients to whole industries) for ‘healthy, long-term prosperity.’
Biomimicry
Instead of extracting nature, biomimicry is studying nature and emulating the way it works into the products’ design and manufacturing process to solve human problems. Janine Benyus popularized biomimicry in 1997 and claimed it as a discipline that treats nature as a model to reach its aim, as a sustainability measure of product innovations, and as a mentor to learn from.
Circular Characteristics and Principle
Despite having various interpretations, the circular economy has mostly been associated with these prominent characteristics:
- Closed-Loop System aimed at waste prevention and products’ total life-span optimization;
- ‘Design-to-Redesign’ thinking;
- A multi-level approach to reach a fundamental shift in the economic system;
- Aim to reach economic prosperity that will be fairly beneficial for the environment and social dimensions.
The concept is also provided with several core principles as guidelines for its real-life implementation. While these principles’ operationalization may vary depending on their background and context, the 3R principle (Reduce, Reuse, and Recycle) is most frequently used.
- Reduce strives to enhance the production and consumption efficiency by minimizing resource inputs (primary energy, virgin materials) and waste.
- Reuse is directed towards using the production outputs again in their original design instead of directly discarding them after the first usage.
- Recycle focuses on closing the production loop by reprocessing waste materials to their original purpose or other purposes.
Circular Implementations by Stakeholders
The circular economy development efforts are not limited to the academic realm. Various stakeholders have attempted to utilize this concept, proving that the circular economy has also gained appeal among practitioners. Several governments have attempted to either fully or partly incorporate the circular economy aspects into their national regulations.
Germany: Took the first initiative by implementing The Waste Disposal Act in 1976 before enacting The Closed Substance Cycle and Waste Management Act in 1996
Japan: It is the next country to force circular economy regulation through the Law for Effective Utilization of Recyclables in 1991, followed by the Basic Law for Establishing a Recycling-Based Society in 2002.
China: China has made clear intentions to fully implement the circular economy system through the Circular Economy Promotion Law of the People’s Republic of China in 2009, therefore becoming the most-studied country regarding the circular economy implementation.
European Union: The European Union has also set the same vision in the Waste Directive 2008/98/EC and the 2015 European Union Action Plan for the Circular Economy (Ghissellini et al., 2016; Geissdoerfer et al., 2017).
Non-governmental institutions are working towards the circular economy conceptualization and utilization as well, such as think tanks – Ellen MacArthur Foundation (United Kingdom), Sitra (Finland), Collaborating Centre on Sustainable Consumption and Production (Germany) – and major consulting firms – Accenture, Deloitte, EY, and McKinsey & Company.