Implementing the Circular Economy for Sustainable Development

By Hans Wiesmeth

Implementing the Circular Economy for Sustainable Development presents the concept of the circular economy with the goal of understanding its present status and how to better implement it, particularly through environmental policies. It first tackles the definition of a circular economy in the context of sustainability and the differences in defining the concept across disciplines, including its fallibilities and practical examples. It then goes on to discuss the implementation of a circular economy, including the increasing variety of technological, mechanical, and chemical procedures to contend with and the need for stakeholder support in addition to improved business models.

The second half of the book, therefore, presents tools, approaches, and practical examples of how to shape environmental policy to successfully implement a circular economy. It analyzes deficiencies of current regulations and lays the groundwork for the design of integrated environmental policies for a circular economy.

Authored by an expert in environmental economics with decades of experience, Implementing the Circular Economy for Sustainable Development is a timely, practical guide for sustainability researchers and policymakers alike to move more efficiently toward a circular economy and sustainable development.

• Presents a clear view of the critical components, features, and issues of a circular economy
• Discusses a variety of practical examples from current policies in the context of a circular economy to better understand the challenges associated with its implementation
• Analyzes strengths and weaknesses of current environmental policies and their interactions with innovations in engineering and science

• Language: English
• Publisher: Elsevier Science
• Release date: Nov 13, 2020
• ISBN: 9780128218044

Hans Wiesmeth

Dr. Hans Wiesmeth is the President of the Saxon Academy of Sciences and Humanities, Leipzig, Germany, and a professor emeritus of the Faculty of Business and Economics of Technical University of Dresden, Dresden, Germany. He also works as the Academic Director of the Laboratory for International and Regional Economics at Ural Federal University, Yekaterinburg, Russia. Dr. Wiesmeth has visited many international universities, including the University of Western Ontario, London, Canada, and York University, Toronto, Canada. He has participated in various national and international research projects, including EU projects on environmental issues such as waste management and renewable energy sources in developing countries.

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Part I: Introduction

This first part of the book introduces in Chapter 2 the circular economy as the natural economic system which respects the fundamental functions of the environment as supplier of natural resources, receiver of waste, and as direct provider of utility. This leads then to a generic definition of the circular economy, which leaves enough room for country-specific implementations of a circular economy – taking into account local framework conditions.

Important roots of the concept, both in the more theoretic, economic, but also in the more practical, applied context are investigated, pointing to roots in environmental economics on the one hand and in more technical fields such as industrial ecology on the other. In each case the focus is on observance of the waste hierarchy and sustainability with assigning technical and technological issues somewhat different roles in the two approaches. A further remark refers, already at this stage, to societal path dependencies, which may impede the implementation of a circular economy.

Chapter 3 considers different perceptions of a circular economy in literature and practice. The review reveals some shifts in the understanding of the concept, in particular regarding the waste hierarchy. Various contributions emphasise the role of appropriate business models for implementing a circular economy. Potential business opportunities are propagated on a large scale with the Circular Economy Package of the European Union, the European Green Deal or the mission of the Ellen MacArthur Foundation. Other perceptions of a circular economy focus more on innovative technologies or, more generally, on a sustainable development. The chapter then presents and discusses some practical approaches: of the Ellen MacArthur Foundation, the European Union with its Circular Economy Package, and the Russian TIARCENTER.

Chapter 4 addresses the fact that some countries adopt circular economy strategies earlier than others. What are reasons for this observation, generating circular economy leaders and followers? The investigation points to the substantial influence of availability of natural resources and land for dumping waste, but soft factors such as environmental awareness, to some extent depending on economic wealth, seem to play a role, too. Strategic behaviour regarding first-mover or late-mover advantages are of relevance in addition. The detailed situation of various countries: Germany and China as leaders, Russia and Georgia as followers, and the United States of America as a special case are investigated in more detail.

The last chapter of Part I analyses various environmental regulations with a focus on implementing a circular economy. The analysis shows that these regulations have deficiencies as their goals are not really achieved. Individuals obviously react on these regulations and the available technologies in not always completely predictable ways. Thus these case studies allow valuable insight into the interaction of individuals with environmental regulations and environmental technologies.

Summarising, this first part of the book lays the foundation for the further investigations. There is a formal definition of the circular economy, there is a review of various perceptions, there is an investigation of leaders and followers, and there are experiences with attempts to implement a circular economy. All these aspects need to be explored and exploited in the following parts and chapters, before the issue of implementing a circular economy can be fully addressed in Part V.

Chapter 2: The circular economy – Understanding the concept

Abstract

This chapter presents and discusses general perceptions of the circular economy. The academic, more theoretical concept with roots in environmental economics emphasises the inherent circular structure of an economic system due to the indispensable interactions of the economy with the environment. The behaviour of consumers and producers is important for sustainability regarding natural resources and all aspects of handling waste in order to retain or restore the assimilative capacity of the environment. Proponents of technical, more practice-oriented concepts of a circular economy with roots in disciplines such as industrial ecology share this view in principle. Their focus is, however, more on appropriate designs, and new materials and technologies to ensure that waste and pollution are not created in the first place. And, as a first hint, the implementation of a circular economy is also dependent on societal path dependencies.

Keywords

Circular economy; Environmental economics; Practice-oriented concepts; Societal path; Industrial ecology; Sustainable development goals

Understanding the circular economy means understanding the perceptions of the concept. The more theoretical, academic perception has one of its strongest roots in the sub-discipline of environmental economics, orientating therefore more on the behaviour of the economic agents, consumers and producers, in particular. The academic field of environmental economics emerged gradually in the 1960s, also as a response to the more and more noticeable discrepancies between the widely accepted social desideratum of a lasting economic growth, and a troubling and increasing environmental degradation, visible in many parts of the world: in developing and industrialised countries, in transition and emerging economies, in market and centrally planned economies – regardless of the political system. Disturbing reports, such as Limits to Growth by the Club of Rome (Meadows, Meadows, Randers, & Behrens, 1972), pointed in particular to the complex of problems troubling men of all nations (p. 9), likely constraining future living conditions, if nothing is done to address these problems.

The more technical, practice-oriented perceptions of the concept have roots in disciplines such as industrial ecology, focusing on material and energy flows in industrial systems, and are thus deeply grounded in science, technology and engineering. Environmental issues are often related to technological activities: waste and pollution are not accidents, but result from inappropriate designs. The Ellen MacArthur Foundation, established in 2010 to accelerate the transition to a circular economy, refers to waste and pollution as consequences of decisions made at the design stage, where around 80% of environmental impacts are determined. Thus it seems to be obvious that – according to this view – further advances in science and technology should play a major role in implementing a circular economy, which is based on the principles of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems.

The growing concern with air, soil and water pollution, and persistent environmental degradation in general, has kept motivating scientists from all areas, including economists and engineers, to reconsider and preserve the fundamental role the environment has in the economies of both the developed and the developing world. It is in this situation that the concept of the circular economy emerged.

The more or less simultaneous appearance of both theoretical and practical perceptions reveals the highly interdisciplinary character of the circular economy: economics, management, science, technology and engineering play a crucial role, in particular regarding the implementation of a circular economy. Whereas scientists and engineers provide insights and technologies, economists and managers have the explicit task to design and implement appropriate environmental policies, so-called circular economy (CE) policies, which motivate consumers and producers to adequately support the goals of a circular economy. It will turn out that the interaction between humans and technology is not always without challenges for implementing a circular economy – pointing again to some discrepancies between the various perceptions of a circular economy.

This chapter introduces first a generic academic concept of the circular economy, and discusses thereafter aspects of prominent practical conceptualisations. Various publications, such as Heshmati (2015) and Antikainen, Lazarevic, and Seppälä (2018), provide further detailed remarks on the history of circularity in economics and especially in environmental economics. Ghisellini, Cialani, and Ulgiati (2016) present a survey on the origins of the circular economy (see, in particular, Fig. 1, p. 13), whereas Murray, Skene, and Haynes (2017) turn to the origins of the circular economy term itself (see p. 371), and Hartley, van Santen, and Kirchherr (2020) review briefly some definitions. On the other hand, Winans, Kendall, and Deng (2017) consider the history of the more practice-oriented concepts of the circular economy, and identify challenges and research gaps. The last section of this chapter points to societal path dependencies and their role in the context of implementing a circular economy.

The following section, based on Pearce and Turner (1989), presents the relevant interactions between the economy and the environment, thereby suggesting that a closed, circular structure is the native structure of an economic system, not the traditional open and linear structure. This leads, then, to the fundamental characteristics of the circular economy, providing the basic guidelines in this book for implementing a circular economy.

2.1: The academic concept of a circular economy

Pearce and Turner (1989) introduce and investigate the concept of the circular economy in their textbook, devoting a complete chapter to explaining the fundamental ways in which consideration of environmental matters affect our economic thinking (p. 29). They discuss the obvious interactions between the environment and the economy: the environment as a direct source of utility, as a supplier of natural resources for production, and as receiver of waste, which could not be assimilated or recycled by nature itself. Andersen (2007) additionally emphasises the function of the environment as a life-support system for the biosphere as a separate fourth item.

Ignoring these vital tasks of the environment with the possible consequences of a depletion of natural resources and the further more or less uncontrolled landfilling of waste, leaves us with the well-known paradigm of the linear economy (see Fig. 1.2 in Ellen MacArthur Foundation, 2017), which is, or rather was, based on the implicit assumption that the natural system, the environment, will continue to provide appropriate and necessary resources, and that it has the unlimited capacity to digest or assimilate all waste products – leading to the air, water and soil pollution accompanying the process of industrialisation in the developed world and the emerging economies, and spilling over to the developing countries by means of trade relations, tourism and their own desire and need for economic growth.

However, noticeable depletions of certain resources and the more and more recognisable environmental pollution with its adverse effects on the bio-system and even on the economic system, reveal the obvious capacity constraints of the environment to serve as a supplier of resources and as a repository of waste products, to assimilate waste and turn it back into harmless products. The focus must therefore shift to the excessive exploitation of resources and the generation of amounts of waste, which impair the interactions of the environment with the economy, thereby also harming the functioning of the economic system: everything is an input into everything else (Pearce & Turner, 1989, p. 37). This is then their motivation for referring to a closed and circular picture of an economy, the circular economy, as the natural economic system. As the situation of the economy and thus also the situation of the environment result to a large extent from decisions of economic agents, it is the behaviour of these economic agents, mainly producers and consumers, that needs to be adjusted – certainly with adequate support from science and technology.

Pearce and Turner (1989) stress the relevance of the laws of thermodynamics and the materials balance model to justify this academic picture of a circular economic system (p. 40). They refer in particular to the Second Law of Thermodynamics to point out that not all waste can be recycled. Taking additionally into account the empirical observation that it is almost impossible or at least very costly to collect all waste leads quite naturally to the necessity to prevent waste as the priority task of the waste hierarchy (see Chapter 18), beyond that preventing waste also helps to save resources.

Without going into more details of these laws of physics (see, for example, Ayres, 1998), the consequences of these considerations are clear: for long-run economic growth, for sustaining an economy (p. 41), it is of utmost importance to prevent waste and limit the uncontrolled disposal of waste in order to not endanger the assimilative capacity of the environment. In addition to that, it is necessary to observe and sustain the stocks of exhaustible resources and preserve the environment itself as a direct provider of utility, the other vital functions of the environment. Consequently, Pearce and Turner (1989) point to the importance of establishing conditions for the compatibility of economies and their environments for a sustainable development.

These basic interactions are indicated in Fig. 2.1, redrawn from Pearce and Turner (1989): resources are taken from the environment and used for the production of consumption commodities. At each stage of this process waste arises, which can be partially recycled to replenish resources, or ends up in the environment with its limited assimilative capacity. The circular economy does not exceed this assimilative capacity and not deplete natural resources. Pearce and Turner (1989) develop this figure further into more complex diagrams of the circular economy, pointing also to possible consequences of exceeding the limited assimilative capacity of the environment regarding waste (see Figs. 2.3 and 2.4). These consequences, not indicated in Fig. 2.1, include the potential negative feedback of excessive waste and excessive depletion of resources on production and consumption possibilities – on economic activities in general.

Fig. 2.1 A basic model of a circular system. Protecting the environment and saving resources through recycling. Source: Own drawing after Fig. 2.2 in Pearce, D. W., & Turner, R. K. (1989). Economics of natural resources and the environment. Johns Hopkins University Press.

Thus, according to Pearce and Turner (1989), the academic concept of the circular economy points to the inherently circular structure of an economic system. It is, therefore, from a formal, theoretical point of view, quite natural to adopt the following generic concept of the circular economy:

Definition 2.1

In a generic sense, the circular economy fully respects the interdependencies between the environment and the economy and preserves the fundamental functions of the environment in a sustainable way.

In principle, implementing a circular economy in this generic sense means that economic activities should respect this particular structure, these interdependencies with the environment. The dominant issues are sustainability and all aspects of handling waste. Regarding the latter, waste prevention should lead the hierarchy, and by means of recovery and recycling, landfilling of waste should be reduced to a minimum. Sustainability should refer to saving and preserving resources, but also to observing the assimilative capacity of the natural environment.

To accomplish these tasks is, however, anything but simple: the interactions between the economy and the environment depend on the special situation in a particular country or region. Abundance of certain natural resources or ample availability of land for dumping waste on the one hand, or a high environmental awareness on the other, may lead to different perceptions regarding sustainability and suitable features of the circular economy to be considered for implementation. It is therefore, as already indicated, advisable to speak of the implementation of a circular economy in this case, referring to such a specific conceptualisation. As these interdependencies may vary from region to region, this generic definition allows for many different interpretations and just as many different proposals for implementing a circular economy.

Already at this point it is necessary to draw the attention to increasingly interconnected economies: intensifying trade relations and tourism tend to internationalise initially local or regional environmental issues with immediate consequences for the degrees of freedom regarding the choice of circular economy strategies. Moreover, there are the inherently global issues such as climate change, which require a global approach in a circular economy context. As will be seen, these different perceptions regarding the concept and the implementation of a circular economy may and do create problems in a highly interconnected world.

These aspects are critical for all practical matters and will be further discussed (see Chapter 17, for example). The following section considers more technical, practice-oriented concepts of the circular economy.

2.2: Practice-oriented concepts of a circular economy

The Ellen MacArthur Foundation points to various schools of thought, which have contributed to refining and developing the circular economy concept. Among them, following the characterisation of the Ellen MacArthur Foundation, are the cradle to cradle concept with its special design philosophy, perceiving nature's biological metabolism as a model for a technical metabolism, and the Performance Economy with its closed loop approach to production processes with the goals of product-life extension, long-life goods, reconditioning activities, and waste prevention, and its focus on selling services, rather than products, in view of a sharing economy. Biomimicry is based on nature's best ideas, and imitates these ideas to solve human problems, and, finally, industrial ecology is the study of material and energy flows through industrial systems. Fig. 1.4 in Ellen MacArthur Foundation (2017) characterises material, energy and resources flows in a circular