A circular economy is a way of using resources and making products that focuses on sharing, renting, reusing, repairing, updating, and recycling materials and items. This method helps keep products useful for as long as possible. The goal is to solve big problems like climate change, loss of wildlife, waste, and pollution by using design-based rules. The three main rules needed to move to a circular economy are:

A circular economy is different from the traditional way of using resources, which is called a linear economy. Over the past ten years, many people in schools, businesses, and governments have studied the idea of a circular economy. It is becoming more popular because it helps reduce harmful gases, uses fewer raw materials, creates new business opportunities, and makes using resources more sustainable. Governments see a circular economy as a way to fight global warming and help the economy grow over time. A circular economy can also connect people and resources in certain areas to keep materials in use locally. The European Parliament describes a circular economy as a system where products and materials are shared, rented, reused, repaired, updated, and recycled for as long as possible. This helps products last longer. If the world uses circular economy methods, it could reduce global emissions by 22.8 billion tons, which is about 39% of all emissions in 2019. Just using circular economy ideas in five areas—cement, aluminum, steel, plastics, and food—could cut 9.3 billion metric tons of carbon emissions, which equals all emissions from transportation today.

In a circular economy, business models are important for changing from old ways to new ones. Some models that help include offering products as a service, sharing platforms, and ways to keep products working longer. These models help use resources better, reduce waste, and create value for businesses and customers, while supporting the goals of a circular economy.

Businesses can also change to a circular economy, which requires making big changes to how they operate. Using circular economy ideas often means creating new plans and redesigning products, services, and how they reach customers to make long-lasting solutions. This leads to what is called "circular business models."

Definition

The circular economy has many definitions and methods. In China, it is a top-down national goal set by the government. In the European Union, Japan, and the United States, it is a tool used to create bottom-up policies for managing waste and protecting the environment. The main goal of the circular economy is to separate environmental harm from economic growth. A full definition is: "A circular economy is an economic system that aims to create zero waste and pollution throughout the life of materials, from their origin in nature to their use in industries and by consumers. It applies to all ecosystems involved. At the end of a material’s life, it is either reused in an industrial process or safely returned to the environment, like in natural cycles. This system creates value at different levels and uses sustainability fully. Energy used is clean and renewable. Resources are used efficiently. Governments and responsible consumers help keep the system working long-term."

In general, circular development is a way to produce and consume goods and services that supports a society that can be self-sufficient and sustainable, while respecting environmental resources. The circular economy changes the economy to be regenerative, meaning it focuses on reducing waste and environmental harm before problems occur, instead of waiting to fix them later. This is done by designing new processes and solutions to use resources better and reduce dependence on limited resources.

The circular economy follows three main principles: removing waste and pollution, keeping products and materials in use as long as possible, and restoring natural systems.

Other definitions and clear differences between linear and circular activities have been discussed in economic studies.

In a linear economy, natural resources are turned into products that eventually become waste because of how they are designed and made. This process is often called "take, make, waste." In contrast, the circular economy changes this approach to a more restorative system. It uses methods like reuse, sharing, repair, refurbishment, remanufacturing, and recycling to create a closed-loop system. This reduces the need for new resources and lowers waste, pollution, and carbon emissions. The circular economy keeps products, materials, equipment, and infrastructure in use longer, making these resources more productive. Waste and energy are used as inputs for other processes through waste valorization, such as being part of another industrial process or returning to nature as regenerative resources (e.g., compost). The Ellen MacArthur Foundation defines the circular economy as an industrial system that is restorative or regenerative by design and value.

Circular economy strategies can be used at different levels, from individual products and services to entire industries and cities. For example, industrial symbiosis is a strategy where waste from one industry becomes a resource for another, creating a network of resource sharing that reduces waste, pollution, and resource use. Similarly, circular cities use circular principles in urban planning to create local resource loops and encourage sustainable living. In 2022 and 2023, less than 10% of global economic activity was circular. Each year, the world uses about 100 billion tons of materials, and more than 90% of these materials are wasted. The circular economy aims to eliminate this waste completely.

History and aims

The idea of a circular economy does not have a single starting point or one person who created it. It is connected to several different areas of study, such as industrial ecology, biomimicry, and cradle-to-cradle design. Industrial ecology looks at how materials and energy move through industries, which helps explain the circular economy. Biomimicry uses patterns and strategies found in nature to design human systems. Cradle-to-cradle design focuses on creating products and systems that consider their entire life cycle, from when materials are first used to how they are handled at the end of their use, with the goal of reducing waste and using resources efficiently. These connected ideas help shape the circular economy.

In the second half of the 19th century, an early effort to promote ideas similar to the circular economy was led by the Society for the Encouragement of Arts, Manufactures and Commerce (now known as the Royal Society of Arts). According to economic geographer Pierre Desrochers, members of this group argued that the desire for profit, long-distance trade, and roles now missing from today’s discussions, such as waste dealers, helped create more value from manufacturing leftovers.

In the 1968 book General System Theory, biologist Ludwig von Bertalanffy discussed how growth and energy work in open and closed systems. This theory was later used in other areas, including economics. Economist Kenneth E. Boulding, in his 1966 paper "The Economics of the Coming Spaceship Earth," said a circular economy is necessary for keeping human life on Earth sustainable. Boulding described the "cowboy economy" as a system where the natural environment is seen as limitless, with no limits on how much energy or materials can be used or received.

In the 1981 book Jobs for Tomorrow: The Potential for Substituting Manpower for Energy, Walter R. Stahel and Geneviève Reday-Mulvey introduced ideas that helped shape the circular economy by showing how increasing labor could reduce energy-heavy activities.

Simple economic models often ignored how the economy and environment are connected. Allan Kneese, in "The Economics of Natural Resources," explained that resources are not endless.

In the 1990 book Economics of Natural Resources and the Environment, Pearce and Turner described the shift from a traditional linear economic system (where resources are used and then discarded) to a circular system (where waste is reused as inputs).

In the early 2000s, China included the circular economy in its industrial and environmental policies, focusing on resource use, production, waste management, and life cycles. The Ellen MacArthur Foundation helped spread the idea in Europe and the Americas.

In 2010, the circular economy became more popular worldwide after reports were published. The European Union introduced its circular economy vision in 2014, with a plan launched in 2020 that aimed to create a climate-neutral, competitive economy with empowered consumers.

The spread of the circular economy idea was influenced by three major events: rising raw material prices between 2000 and 2010, China’s control of rare earth materials, and the 2008 economic crisis. Today, climate and environmental challenges are pushing companies and individuals to rethink how they produce and use resources. The circular economy is seen as a solution to these issues. Key reasons for supporting it include reducing pressure on natural resources, cutting waste, lowering carbon emissions, and creating new ways to produce and consume. Companies support it because it can secure raw materials, reduce costs, and generate long-term value. A central idea of circular business models is to create loops to recover value that would otherwise be lost.

A major problem with the linear economy is the loss of raw materials due to increased disorder (entropy). Waste is created during production, and disorder grows further when materials are mixed or worn down during use. At the end of a product’s life, landfills cause even more disorder. Because of this, resources are effectively "lost forever."

Circular development is closely linked to the circular economy and aims to build a sustainable society using recyclable and renewable resources. It helps protect society from waste and creates a model that does not treat resources as endless. This new economic model considers environmental and social costs when producing goods and services. Circular development supports the circular economy to create societies that meet waste management and sustainability goals while addressing people’s needs. It helps economies and societies become more sustainable overall.

However, some people criticize the circular economy, saying its benefits may be overstated. They argue the term is too broad and hard to define, making it difficult to understand or measure. Critics also say the circular economy ignores long-established knowledge, such as the thermodynamic rule that matter cannot be created or destroyed. They point out that a future with no waste or infinite recycling is not practical. They also note that the circular economy often ignores perspectives from the Global South and lacks clear evidence that it is more sustainable than the linear economy or that it has social benefits. Other concerns include risks from highly connected systems, which could cause problems for the public. When used dishonestly, the idea of a circular economy might be used by companies for public relations, not real change, leading to a new form of greenwashing. Because of these issues, the circular economy may not solve all problems as some hope.

Sustainability

The circular economy is a system that aims to be more sustainable than the traditional linear economy, which follows a "take, make, dispose" model. By using fewer resources and reducing waste, the circular economy helps protect the environment and conserve natural resources. However, some experts believe this idea oversimplifies the complexity of current systems and may overlook challenges or trade-offs. For example, many studies on the circular economy focus less on how it affects people and society. In some cases, new solutions, such as buying more energy-efficient equipment, may be needed. Researchers from Cambridge and TU Delft found at least eight different ways sustainability and the circular economy are connected. It is also important to recognize that innovation plays a key role in creating long-term sustainable development through circular economy practices.

The circular economy applies to many areas, including industries, products, natural resources, and services. It involves understanding the limits of the circular economy, managing strategies, and exploring outcomes like reusing materials or improving waste management. This system covers all types of industries and includes both "technical" resources (such as metals and fossil fuels) and "biological" resources (like food and wood). Many experts agree that moving away from fossil fuels to renewable energy is essential for creating resilient systems. The circular economy also discusses the role of money and finance, with some leaders suggesting changes to how economic success is measured. One study suggests that modular designs—systems made of separate, interchangeable parts—could help make energy systems more sustainable. For example, renting products like electronics or furniture instead of buying them allows companies to earn income from the same item multiple times, reducing the need to produce more goods. Recycling programs are often linked to the circular economy and are the most common examples of this system in practice.

According to Circle Economy, if the circular economy were fully adopted worldwide, it could reduce global carbon emissions by 22.8 billion tons, or 39% of all emissions in 2019. By 2050, implementing circular strategies in five major industries—cement, aluminum, steel, plastics, and food—could cut emissions by 9.3 billion metric tons, nearly half of all emissions from producing goods globally. This reduction would be equivalent to eliminating all emissions from transportation worldwide.

The idea of a circular economy was first introduced in 1966 by Kenneth Boulding, who compared an "open economy" (with unlimited resources and waste) to a "closed economy" (where resources are reused). Boulding’s essay, "The Economics of the Coming Spaceship Earth," is often seen as the first description of a circular economy, even though he did not use that term.

The circular economy is based on studying systems that operate in cycles, like living systems. Over time, the concept has grown to include ideas such as "cradle to cradle" design, ecological laws, and "industrial ecology." These ideas emphasize closed loops and sustainability.

In 1989, British economists David W. Pearce and R. Kerry Turner described how traditional economies did not include recycling, treating the environment as a place for waste. In the 1990s, Tim Jackson helped develop the scientific foundation for the circular economy through his work on clean production strategies. He later wrote about shifting from a system that extracts resources to one that recycles them.

In 1976, Walter Stahel and Genevieve Reday proposed a circular economy in a report to the European Commission, highlighting how it could create jobs, save resources, and reduce waste. Stahel’s institute focused on making products last longer, reusing goods, and reducing waste by offering services instead of selling products. This idea, called the "functional service economy," encourages more localized economic activity.

China included the circular economy as a national policy in its 11th five-year plan starting in 2006. The Ellen MacArthur Foundation later promoted the economic benefits of the circular economy, helping to spread the idea globally. Supporters say the circular economy is a useful framework for addressing the end of the era of cheap oil and materials and supports the transition to a low-carbon economy. It could also help meet the goals of the Paris Agreement, which aims to limit global warming to 1.5°C. To achieve this, an estimated 15 billion tons of CO₂ emissions must be reduced annually by 2030. Studies suggest circular economy strategies could cut emissions by about half of this amount.

The linear economy uses finite resources to make products with short lifespans, which are often discarded in landfills or burned. In contrast, the circular economy learns from natural systems, where nutrients are reused in cycles. This is why terms like "closed loop" and "regenerative" are often used. While different groups may define the circular economy differently, they all share similar core principles. One important figure is Walter R. Stahel, an architect and economist known as the "father of the circular economy."

Towards the circular economy

In 2013, a report titled Towards the Circular Economy: Economic and Business Rationale for an Accelerated Transition was released. The report was created by the Ellen MacArthur Foundation and developed by McKinsey & Company. It was the first of its kind to examine the economic and business opportunities of moving to a restorative, circular model. The report uses examples of products and analyzes the entire economy to show how the European Union could benefit. It suggests that a part of the EU’s manufacturing industry could save up to $630 billion in material costs each year by 2025. These savings could help grow the economy in areas like product development, remanufacturing, and refurbishment. The report also identifies important steps for transitioning to a circular economy, such as skills in circular design and production, new business models, skills in managing waste and recycling, and working together across industries. A case study from the automotive industry shows the importance of using a circular model throughout a company’s entire value chain, including how products, processes, and systems interact.

A 2015 report by WRAP and the Green Alliance, titled Employment and the Circular Economy: Job Creation in a More Resource Efficient Britain, studied how public policies might affect employment by 2030. It estimates that without changes in policy, 200,000 new jobs could be created, reducing unemployment by 54,000. If policies are more aggressive, 500,000 new jobs could be created, lowering unemployment by 102,000. The International Labour Organization predicts that a circular economy by 2030 might create 7 to 8 million jobs worldwide. However, other research suggests that some jobs in emerging economies might be lost due to the shift to circular practices.

In the United States, a study by Ranta et al. examined factors that help or challenge the circular economy in different regions. The study used a framework developed by Scott R. and looked at two types of manufacturing processes: one focused on products and another on waste management. For the product-focused example, the study included Dell, a U.S. company that makes computers. Dell was the first company to offer free recycling to customers and to sell computers made from recycled materials. For the waste management example, the study included Republic Services, the second-largest waste management company in the U.S. The study identified factors that support or challenge the circular economy by analyzing indicators for each case.

On March 2, 2022, in Nairobi, representatives from 175 countries agreed to create a legally binding agreement to stop plastic pollution by 2024. The agreement will address the entire life of plastic products and suggest alternatives like reusing materials. The agreement aims to help move toward a circular economy, which could reduce greenhouse gas emissions by 25 percent.

It is estimated that improving circular approaches in waste management could help the waste sector reach net zero emissions in the coming decades. Circularity is becoming a focus in many countries. This was a key topic at the 2024 COP 29 United Nations Climate Conference in Baku, Azerbaijan. During the conference, Azerbaijan signed a Joint Resolution to promote global and regional collaboration focused on efficiency and circularity.

Product designs that are long-lasting, easy to fix, upgrade, and disassemble are important for moving toward a circular economy. Designers must balance these goals with avoiding overdesign, which could reduce sustainability. Standardization can help European businesses and consumers by making products more compatible and easier to use. A "Product Family Approach" has been proposed to create common features among different products or product lines.

Some argue that new technologies, like solar panels, should be designed with circular economy principles from the start.

For sustainability and health, circular processes are important. Large amounts of electronic waste are already being recycled, but often far from where they were used, with low efficiency and harmful effects on human health and the environment.

Recycling should help reduce the environmental impact of products and services throughout their entire life cycle.

One study suggests that requiring recyclers to meet certain standards could improve recycling quality and material recovery.

Digital tools can help companies work more efficiently and reduce waste.

Early efforts focused on developing technologies like recycling and remanufacturing, but it became clear that these technologies are not being used enough. To use them effectively, different groups must work together. This has led to a focus on new business models that support circular practices. For example, Rheaply is a platform that helps organizations reuse assets and transition to circular models.

Circular business models aim to close, narrow, slow, intensify, and dematerialize resource loops to reduce waste and resource use. This includes recycling (closing), improving efficiency (narrowing), extending product use (slowing), using products more intensely (intensifying), and replacing products with services or software (dematerializing). These strategies can be achieved by designing systems for material recovery and circular supply chains. These five approaches are seen as general strategies for circular business model innovation. The success of circular products and models depends on the properties of the materials used, which can either help or limit circular efforts.

Circular business models, like the broader economy, can have different goals, such as extending the life of materials and products across multiple uses, or using a "waste = food" approach to recover materials.

Strategic management in a circular economy

The Circular Economy (CE) does not change the goal of businesses to make the most profit. Instead, it offers a different way to achieve long-term success while also solving environmental and social issues from the 21st century. Moving away from straightforward production methods often helps companies develop new skills and improve their performance. This can lower costs, increase efficiency, strengthen brand recognition, reduce risks, create new products, and meet stricter government rules and consumer expectations for eco-friendly practices. However, even though many companies across different industries have successfully used circular solutions, and even though there are many opportunities when a company clearly understands which circular actions fit its needs, making decisions about CE remains very complex. There is no single solution that works for all businesses. Many companies, especially small and medium-sized ones, still find circular strategies difficult to apply or believe they are too expensive and risky. This concern is supported by current studies, such as the Circular Readiness Assessment.

Strategic management is the area of business that helps companies carefully examine CE ideas and explore whether and where circular practices can already exist or be introduced within the company. Previous research shows that developing strategies for circularity is a difficult process that requires repeated steps. A book titled Strategic Management and the Circular Economy was the first to outline a CE-based decision-making process, which includes three stages: analysis, formulation, and planning. Each stage uses tools and ideas commonly used in management consulting, such as idea trees, value chains, VRIE, Porter's Five Forces, PEST, SWOT, the strategic clock, and the internationalization matrix. These tools are adjusted to focus on CE, which helps raise new questions and considerations. While this approach has not yet been fully tested, it is suggested that all standard tools for strategic management can be adapted and used for CE. Specific examples include applying the strategy direction matrix for product vs. market and the 3 × 3 GE-McKinsey matrix to evaluate business strength vs. industry attractiveness, the BCG matrix for market share vs. industry growth rate, and Kraljic's portfolio matrix.

Engineering the circular life cycle

In systems engineering, a "life cycle" describes the steps used to plan, create, build, use, maintain, and end a system. Some industries, like civil aviation, may require specific methods for these processes.

Many complex and certified engineering systems include smaller items people use daily, such as bicycles and household appliances.

The "Circular Lifecycle for Complex Engineering Systems" is a new framework that combines the traditional engineering life cycle with ideas from the circular economy. This framework encourages engineers to review established engineering practices and include new circular principles. It is not about showing material flow diagrams but focuses on important design rules. The framework highlights key circular principles for engineers to consider at each stage of the life cycle. These principles include designing to meet user needs, using proven engineering methods to make products last longer, preparing for renewable energy use, and finding ways to create value from waste.

Like the traditional engineering life cycle, this framework can be used for all engineering systems. The level of detail at each life cycle stage can be adjusted based on the product's or system's complexity.

To apply the circular life cycle to complex engineering systems, the engineering design team must understand the product's ecosystem. The "Lifecycle-Value Stream Matrix" helps engineers and design teams better see the product's ecosystem.

This matrix shows the main stakeholders in the supply chain at different levels of system and equipment design complexity. It is important to remember that these suppliers may change over time. During the early design phase of a complex system, system-level engineers define requirements and design the overall system. As the design progresses, sub-system and equipment suppliers are brought in and integrated into the platform design. Circular engineering principles are included in the platform's requirements during the "Innovate" stage of the life cycle. As the life cycle continues, these principles should be shared throughout the supply chain. Each company should encourage its suppliers to create products and services that support the system's circular operation and use.

Adoption and applications by industry

A circular economy for textiles includes many practices, such as selling used clothing, renting clothes, repairing damaged clothing, collecting and recycling old textiles, and making clothes that last a long time using recycled materials.

This type of economy is a response to the current way the fashion industry works, which is called the "linear model." In this model, raw materials are taken from the Earth, made into products, bought by people, used, and then thrown away. Fast fashion companies have increased the amount of clothing people buy, which makes the problems of the linear model worse. The "take-make-dispose" model causes the fashion industry to lose over $500 billion each year and harms the environment and people. For example, many clothes end up in landfills or are burned, and workers in factories often face unsafe conditions and low pay. A film called The True Cost (2015) explains that in fast fashion, "wages, unsafe conditions, and factory disasters are all excused because of the needed jobs they create for people with no alternatives." This shows that the linear system harms both the planet and people.

Some experts say that using a circular economy can help the textile industry become more sustainable. A 2017 report, A New Textiles Economy, listed four goals: removing harmful materials and microfibers from clothes, designing clothes that are not easily thrown away, improving recycling by changing how clothes are made and collected, and using resources wisely while using renewable materials. Although these goals seem simple, only a few designers have taken action, such as Patagonia, Eileen Fisher, Nathalia JMag, and Stella McCartney. For example, Eileen Fisher’s Tiny Factory allows customers to bring worn clothes to be fixed and sold again. Similar efforts exist in Europe, where outdoor clothing companies let customers return used clothes for repair, redesign, resale, or recycling.

Clothing rental services are also becoming more common in the EU and the US. These companies rent everyday clothes, baby clothes, and maternity wear. Some charge customers based on how long they rent items, while others offer monthly subscriptions.

Research has shown that people who work in informal jobs, like street vendors, help keep clothes in use longer by repairing and reselling second-hand clothing. However, their main reason for doing this is to earn a living, not to protect the environment. This is called a "livelihood-driven circular economy."

The construction industry is one of the largest producers of waste globally. A circular economy can help reduce the environmental harm caused by this industry.

Construction is very important to the European Union and its member countries. It provides 18 million direct jobs and contributes about 9% of the EU’s total economic value. The main reasons for the environmental impact of construction are the use of non-renewable resources and the creation of harmful waste, both of which are increasing quickly. In the EU alone, people and businesses produce over 2 billion tons of waste each year, or about 4.8 tons per person, mostly from building, mining, and manufacturing. Each person in Europe produces about half a ton of household waste annually, but less than half of it is recycled.

Cement production is responsible for 2.4% of global carbon dioxide emissions from industrial and energy sources.

Decisions about a circular economy can be made at different levels: operational (related to specific parts of a process), tactical (related to whole processes), and strategic (related to the entire organization). These decisions can affect both construction companies and construction projects.

At the end of their useful lives, buildings can be carefully taken apart to reuse materials for new buildings and free up space for development. Modular construction systems, which use separate parts, can help create new buildings and make it easier to reuse materials later.

An example of a circular economy in construction is the use of walnut husks as natural abrasives for cleaning brick surfaces. These abrasives are made from crushed walnut shells and can be reused. A study measured the success of a circular economy in a construction company and found that it can create new jobs, such as a "circular economy manager" for construction projects.

The circular economy is also growing in the automotive industry. A study in the heavy-duty and off-road vehicle industry looked at how circular practices can be used with lean manufacturing, a method that focuses on reducing waste and improving efficiency. Combining lean and circular approaches can help not only reduce waste but also improve the overall environmental impact of the industry. A 2016 report by Accenture said that the circular economy could change how carmakers compete by improving price, quality, and convenience, and could double revenue by 2030 while reducing costs by up to 14%. So far, carmakers have used recycled materials, remanufactured parts, and redesigned cars. Remanufacturing is often used for spare parts, like gearboxes, which can reduce carbon emissions by 36% compared to making new parts. However, only 75% of vehicles are recycled in the EU, meaning 25% may end up in landfills. In the electric vehicle industry, robots help disassemble vehicles. A project called ETN-DEMETER in the EU is studying how to design electric motors so their rare earth magnets can be easily removed for recycling.

Some carmakers, like Volvo, are exploring ways to apply circular economy principles to their vehicles.

Circular developments around the world

Since 2006, the European Union has worked to address environmental issues by creating rules and laws. Three important laws include:

• The Ecodesign Framework Directive
• The Waste Framework Directive
• The Registration, Evaluation, Authorisation and Restriction of Chemicals Regulation

On 17 December 2012, the European Commission released a document called "Manifesto for a Resource Efficient Europe."

In July 2014, the EU started a zero-waste program to support a circular economy. Since then, many reports and laws about the circular economy have been created. A table summarizes these reports and laws from 2014 to 2018. In addition to these laws, the EU updated the Eco-design Working Plan to include circular economy goals and created eco-design rules for seven product types (refrigerators, dishwashers, electronic displays, washing machines, welding equipment, and servers and data storage products). These rules aim to make products easier to repair by ensuring spare parts and manuals are available.

The EU has increased its research budget for the circular economy, reaching 964 million euros between 2018 and 2020. From 2016 to 2019, the EU invested 10 billion euros in circular economy projects.

A waste atlas collects some data about waste management in countries and cities, though the data is limited.

The "Circularity Gap Report" states that only 8.6 percent of minerals, biomass, fossil fuels, and metals used in the global economy are reused.

The European Commission's Circular Economy Action Plan has led to many projects focused on waste reduction, material sustainability, and circularity in consumer goods. Despite many EU laws, the EU's circularity rate was 11.5% in 2022 and is decreasing.

The 2012 "Manifesto for a Resource Efficient Europe" said, "In a world with growing resource and environmental pressures, the EU must transition to a resource-efficient and regenerative circular economy." It also emphasized the need for "systemic changes in resource use and recovery" to support jobs and competitiveness, and outlined steps like innovation, investment, regulation, ending harmful subsidies, and setting clear goals.

The EU's environmental research and innovation policies aim to support the circular economy, using programs like Horizon 2020 to fund projects worldwide. The circular economy is seen as important for economic growth, emphasizing sustainability, innovation, and investment in waste-free initiatives.

The EU's circular economy plans are guided by its 2018 Circular Economy Package. Previously, EU policies focused mainly on waste management, but less attention was given to eco-design, which is the first part of the circular economy cycle. To highlight this gap, the EU launched the Ecothis campaign to raise awareness about the importance of eco-design.

In 2020, the EU released its Circular Economy Action Plan, which included 54 measures to boost Europe's competitiveness, promote sustainable growth, and create jobs. These measures included optimizing raw material use, reducing waste, and cutting greenhouse gas emissions. The plan aimed to create a framework for the circular economy and develop markets for recycled materials. Key areas covered by the plan are:

• Production
• Consumption
• Waste Management
• Boosting markets for secondary materials
• Innovation, investment, and 'horizontal' measures
• Monitoring progress

The plan also integrated existing policies and legal tools. The European Economic and Social Committee supported the plan through detailed discussions.

The plan was approved by the European Commission in March 2020, with 574 out of 751 MEPs voting in favor. It focuses on managing resource-heavy industries, reducing waste, achieving zero carbon emissions, and standardizing sustainable products. Before this plan, the 2019 Green Deal aimed to make Europe carbon-neutral. In 2021, the European Parliament proposed five key areas for the Circular Economy Action Plan (CEAP):

• Batteries
• Construction and demolition
• Information and Communication Technology (ICT)
• Plastics
• Textiles

Additional areas include packaging and food, and water.

Countries leading in circular economy efforts include:

• The Netherlands: Aims to reuse 50% of materials by 2030 and achieve a waste-free economy by 2050.
• Germany: Leads in waste management and recycling.
• France: Introduced a 2018 roadmap with 50 measures for a circular economy.
• Belgium: Ranks second in circular material use and often scores highly in other areas.

Other notable countries are Italy, the United Kingdom, Austria, Slovenia, and Denmark.

Outside the EU, countries like Brazil, China, Canada, the United States, and Japan are also working on circular economy goals.

Most countries leading in circular economy efforts are in Europe.

Critiques of circular economy models

There is some disagreement about the idea of the circular economy. Corvellec (2015) noted that the circular economy focuses on continuing economic growth with limited efforts to reduce growth, and it is not the most extreme approach to reducing growth. Corvellec (2019) discussed the role of waste in ecosystems and explained that waste producers cannot separate themselves from their waste. Waste has value that changes over time and depends on different factors. Scatolic engagement uses Reno’s comparison of waste to animal waste, which acts as a signal for communication between species. This comparison highlights the difficulty of separating waste from its producers and the changing value of waste.

Corvellec and Stål (2019) expressed mild concerns about systems in the clothing industry that aim to return used products to manufacturers, as these systems may not fully address more serious waste reduction efforts. Research by Zink and Geyer (2017) questioned the circular economy’s focus on engineering solutions, pointing out that it often ignores the economic aspects. They also raised doubts about whether closing material and product loops truly prevents the need for new materials made from raw resources.

Other critiques of the circular economy (CE) include Allwood’s (2014) discussion of the limits of making materials reusable and his questioning of whether the circular economy is practical in a world with increasing demand. McMillan et al. (2012) noted that the circular economy overlooks how market forces influence the replacement of new materials. Zink and Geyer (2017) described this as a long-standing idea that market forces will eventually replace raw materials with recycled ones. Korhonen et al. (2018) pointed out that the values, societal structures, and cultural beliefs behind the circular economy are rarely examined.

It is also often noted that the circular economy has fundamental limits based on the laws of thermodynamics. According to the second law of thermodynamics, all natural processes increase disorder (entropy) and cannot be reversed completely. This means that in practice, achieving a fully circular economy would require either accepting some waste (which increases entropy) or using large amounts of energy, much of which would be wasted. The European Academies’ Science Advisory Council (EASAC) agreed that the circular economy cannot fully avoid linear processes due to these thermodynamic limits.

The circular economy has also been criticized for not addressing social justice issues. Most circular economy ideas, projects, and policies do not consider how the benefits and costs of circular economy technologies will be shared or who will control them. Some scholars and social movements prefer the term "circular society" instead of "circular economy." A circular society would focus on sharing knowledge, political power, wealth, and resources in fair and democratic ways, rather than just improving resource efficiency.

Finally, some argue that the circular economy should not aim for economic growth but instead prioritize wellbeing. For example, improvements in product efficiency could be offset by increased consumption, which may only be addressed by measures such as limiting choices or controlling the use of harmful products or emissions.

Related concepts

Circular business and economic models share common ideas with other systems. Janine Benyus, who wrote Biomimicry: Innovation Inspired by Nature, describes biomimicry as studying nature’s best ideas and using them to solve human problems. For example, learning from a leaf to design better solar cells is a way to apply this idea.

The blue economy focuses on using ocean resources in ways that support economic growth, create jobs, and improve lives while protecting ocean ecosystems. It seeks to balance human needs with the health of marine environments. Gunter Pauli, in his 2010 book, explains the blue economy as a shift toward using locally available materials, choosing energy-efficient methods, and finding ways to generate income from every step of a process.

The term "cradle to cradle" (C2C) was introduced by Walter R. Stahel and popularized in the book Cradle to Cradle: Remaking The Way We Make Things. This approach encourages businesses to reuse products, extend their lifetimes, and avoid waste. It helps reduce resource use, create jobs, and separate economic success from the need to consume natural resources.

Industrial ecology studies how materials and energy move through industrial systems. It looks at how different businesses interact in an "industrial ecosystem" to create closed-loop systems where waste from one process becomes a resource for another. This eliminates the idea of waste as something unwanted.

Resource recovery involves using waste materials to make new, valuable products. This reduces the amount of waste sent to landfills and ensures that waste is used to its fullest potential.

A similar idea is used in Japan.

Understanding how parts of a system work together is important. Each part is seen as fitting into its environment, infrastructure, and social setting.