Currently, our world economy is only 9.1 percent circular, leading to a massive circularity gap. To move from a linear to a circular economy, we must transform all the elements of the take-make-waste system, focusing on managing resources, how we make and use products, and what we do with them afterwards.
Since industrial revolution we have been extracting resources from the earth to make products, which we consume, and when we no longer need them, throw away. This is called the linear economy or the “Take-make-waste” approach. The disposition of the linear economy towards wasting valuable goods is a severe problem as the planet’s resources are finite but our needs seem infinite. Without a change, by 2050, the world’s consumption level would necessitate the resources of 3 planet Earths. This urgently calls for switching to a circular economy to ensure that we have enough raw materials for food, shelter and clothing in the future.
Benefits of a circular economy
The debate on whether industries can increase their profitability while reducing their dependence on natural resources has been going on for decades. While economic growth has raised people's living standards, it has inevitably generated massive consumer and industrial waste, scaling linear pollution. In light of this, the circular economy has received significant traction from businesses and government leaders alike.
In 2012, the EU adopted the Circular Economy Act (Kreislaufwirtschaftsgesetz) to build are source-efficient Europe. The reform of the legislation adopted by the Federal Cabinet on 12 February 2020 goes much further, feeding into the EU’s industrial strategy to ensure that products placed on the market are designed for sustainability, easier to reuse, repair and recycle . As businesses and governments aim to decouple economic growth from virgin resource inputs and encourage innovation, transitioning into a circular economy is bound to make a positive impact that will be felt across societies.
1. Macro economic Growth: A combination of increased revenues from emerging circular activities and a low cost of production will lead to economic growth. As per the European Commission, more efficient use of raw materials and resources throughout the supply chain materials could reduce the need for new raw materials by 17% -24% by 2030.
2. Job creation: The impact of the circular economy on employment is primarily due to increased spending fueled by lower prices, labor-intensive recycling activities and higher-skilled remanufacturing jobs. With substantial savings on the cost of inputs, the European GDP could grow by about3.9%, creating millions of new jobs.
3. Innovation: As the focus shifts on manufacturing products of a longer life cycle with a sustainable design, the creative opportunity increases. Replacing linear products with circular ones will lead to an innovative economy with higher technological development and profit opportunities for companies.