Environmentalists have long advocated for a circular economy, but its benefits go beyond the environment. A circular economy has the potential to reduce emissions by 40% and create 2 million jobs, according to Deloitte.
According to the latest Circularity Gap Report 2024, the world is not quite where it needs to be in terms of circularity. The production and use of materials are still on the rise. While virtually every industry has a role to play, the tech industry is uniquely positioned well to embrace and promote circularity.
This article explores the concept of a circular economy, how it differs from a traditional economy and its benefits. More importantly, it explores the role of tech in the circular economy.
What Is a Circular Economy?
A circular economy is a production and consumption model that seeks to extend the lifecycle of materials. It focuses on sharing, leasing, repairing, refurbishing, reusing, repurposing, and recycling.
This may involve materials or produced goods. Examples include purchasing secondhand items, recycling materials like plastic, reusing metals from appliances, and leasing physical assets.
The primary aim of a circular economy is to reduce waste as much as possible. Even if a product reaches the end of its life, the materials it’s made of may be reused or recycled in some way. In theory, such practices limit the need to source and produce fresh (virgin) materials and products.
Linear Economy vs. Circular Economy
Unlike a circular economy, a linear economy is the traditional way of doing things. It follows a straight path where materials originate from point A and end at point B. For instance, a smartphone is produced from various materials, used by a consumer, and disposed of once it’s old, damaged, or no longer functional.
The linear economy follows a linear pattern—make, use, and dispose. Products in a linear economy are often designed with obsolescence, meaning they’re deliberately designed to last a limited time to encourage consumers to buy new. On the other hand, products in a circular economy are designed to last long. Every aspect, from choice of material to functionality, is determined by lifespan to ensure a product lasts a while and can be reused or recycled in some way.
Limitations of Linear Economy
A traditional or linear economy is based on consumerism. This model has serious, scientifically proven flaws.
- Resource depletion: Linear economies consume finite resources rapidly, leading to resource scarcity and depletion. Water scarcity is a prime example of that.
- Waste generation: The production and consumption processes in linear economies generate significant amounts of waste that often end up in landfills or contaminate the environment.
- Pollution: Industrial activities in linear economies release pollutants into the air, water, and soil, contributing to environmental degradation and health problems. This pollution has resulted in fast-rising global temperatures.
- Inefficiency: Linear economies often rely on wasteful processes and excessive consumption. For instance, agricultural practices use huge amounts of water (though improvements are being made).
Key Principles of the Circular Economy
There are three core principles of a circular economy:
1. Designing Out Waste and Pollution
This principle calls for rethinking product design to minimize waste and pollution throughout the product's lifecycle. For example, it advocates for using recyclable or biodegradable materials to design products for easy disassembly and repair. Similarly, it suggests implementing manufacturing processes that reduce waste and emissions.
2. Keeping Products and Materials in Use
This principle encourages the reuse and repair of products to extend their lifespan, promoting rental services for products like clothing or electronics and repair services for damaged items. Recycling and upcycling materials into new products can maximize the value of materials.
3. Regenerating Natural Systems
This principle emphasizes returning valuable nutrients to the soil to support healthy ecosystems. It also calls for protecting and promoting biodiversity through sustainable practices.
How the Circular Economy Creates Value
A circular economy’s multifaceted impact targets several shortcomings of traditional linear production and consumption. Data supports its benefits.
Economic Benefits
Accenture says a circular economy can boost economic growth by an impressive $4.5 trillion. While the idea is to reduce production and make consumption efficient, which on paper may seem like an economic reduction, it can create value through new jobs. For instance, it has helped create a thriving electronic repair industry, providing work to millions worldwide.
Environmental Impact
Of course, the environmental impact of circularity in economies is undeniable. As mentioned earlier, a circular economy can cut emissions by nearly 40% by decreasing the emissions from the production of new things. Research shows that purchasing 100 pre-loved garments can displace the production of 85 new ones.
Social and Community Value
The economic and environmental benefits combine to create community value, leading to less polluted environments, less joblessness, and more equality. It also helps uplift the poor segments of society by making consumption accessible and sustainable.
Role of Policy and Regulation
Policies and regulations are at the heart of the circular transition. Governments can incentivize businesses and consumers to adopt more sustainable behaviors by creating a supportive environment for circular practices.
One key strategy is to implement extended producer responsibility (EPR) schemes, which hold manufacturers responsible for the end-of-life management of their products. This encourages product design for recyclability and reuse and promotes efficient waste management systems. Additionally, governments can provide financial incentives, such as tax breaks or subsidies, to businesses that invest in circular economy initiatives. This can help offset the initial costs of adopting new technologies and processes.
Moreover, regulations can set standards for sustainability and environmental performance. For example, governments may mandate using recycled materials in certain products or establish limits on greenhouse gas emissions from manufacturing processes.
Tech’s Place in Circular Economy
As the industry is responsible for roughly 4% of global energy consumption, the information and communication technology (ICT) sector is pivotal in the circular economy. After all, electronics are consumed in virtually every business and home.
Both enterprise and consumer technology can be made more circular. The ideas are the same: products that last long and are recyclable/reusable. But the reality is that tech companies, especially manufacturers, haven’t always been keen on promoting circularity. For instance, some tech giants have been notorious for discouraging third-party repairs, pushing consumers to replace devices rather than repair and refurbish.
Recycling is also not something to write home about. For example, data centers produce 50 million tons of waste, of which only 20% is recycled.
The tech industry has the potential to promote a more circular economy. Tech players can make hardware more circular in several ways. For example, several tech companies have trade-in programs where customers can give their old device for credit and have it recycled. This is one of the many innovative solutions currently being implemented.
How Can the Tech Industry Promote Circular Economy
So, what exactly can tech players do to embrace a circular economy? There are several tried and tested ideas:
- Design for disassembly and repair: Products should be designed to be easily disassembled and repaired, extending their lifespan and reducing waste.
- Use recycled materials: Incorporate recycled materials into product components to reduce the demand for new resources.
- Implement closed-loop systems: Develop closed-loop manufacturing processes that reuse and recycle materials within the production process.
- Offer repair and refurbishment services: Provide repair and refurbishment services to extend the life of products and reduce waste.
- Encourage product sharing and leasing: Promote sharing and leasing models to reduce the need for individual ownership and increase product utilization.
- Develop take-back programs: Implement take-back programs to ensure responsible disposal and recycling of end-of-life products.
- Invest in recycling technologies: Support research and development of innovative recycling technologies to improve material recovery rates.
- Educate and raise awareness: Inform consumers about the benefits of circular practices and encourage sustainable consumption habits.
Do It the PivIT Way!
PivIT is proud to have circularity in its very DNA. From the beginning, our mission has been to help enterprises be more efficient and economical with their hardware purchases and use. Our products and services are designed to promote a circular economy at scale.
Here’s how PivIT helps clients get on board the circularity train:
Extended maintenance—PivIT steps in to extend the life of equipment beyond the end of service with its world-class OneCall maintenance program.
Refurbish servers and network equipment—PivIT buys used servers and other data center equipment and refurbishes them to sell to others.
Sensible purchasing—PivIT helps clients procure energy-efficient, long-lasting equipment from major vendors to help reduce their carbon footprint.
FAQs
What are the four Rs of circular economy?
The four Rs of the circular economy are:
- Reduce: Minimize resource consumption and waste at the source. This involves designing products for durability and efficiency and promoting sustainable consumption habits.
- Reuse: Extending the life of products through reuse and repair. This can involve renting, sharing, or refurbishing items to avoid discarding them prematurely.
- Recycle: Recovering valuable materials from waste for use in new products helps conserve resources and reduce the need for extracting raw materials.
- Recover: Extracting energy from waste through processes like incineration or anaerobic digestion. This can help to generate renewable energy and reduce the reliance on fossil fuels.
What is the aim of the circular economy?
The circular economy aims to create a sustainable economic system that minimizes waste and pollution while maximizing resource efficiency. It seeks to shift away from the traditional linear " take-make-dispose " model and instead promotes a cyclical approach where materials are kept in use for as long as possible.
Who introduced the concept of circular economy?
While several individuals in literature and research have discussed the concept of a circular economy, Allan Kneese explicitly mentioned it in the book “The Economics of Natural Resources” in 1988.