A circular economy, also called circularity, is a way of making and using things that focuses on sharing, renting, reusing, fixing, restoring, and recycling materials and products. 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 ideas that follow three main principles. These three principles are needed to change from the current system to a circular economy.
A circular economy is the opposite of the traditional linear economy, which uses resources in a way that creates waste. Over the past ten years, experts in schools, businesses, and governments have studied the idea of a circular economy. People are becoming more interested in it because it can help reduce carbon emissions, use fewer raw materials, create new business opportunities, and make consumption more sustainable. Governments see a circular economy as a way to fight global warming and help the economy grow long-term. It can also connect people and resources in certain areas to keep materials in use locally. The European Parliament describes a circular economy as "a way of making and using things that includes sharing, renting, reusing, fixing, restoring, and recycling materials and products for as long as possible. This keeps products useful for longer." If the world uses circular economy methods, it could reduce global emissions by 22.8 billion tons, which is the same as 39% of all emissions in 2019. In just five areas—cement, aluminum, steel, plastics, and food—using circular economy ideas could cut 9.3 billion metric tons of CO₂, equal to all emissions from transportation today.
In a circular economy, business models are important for changing from the old way of doing things to the new. Some business models that support this include renting products instead of selling them, 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 helping the goals of a circular economy.
Businesses can also move toward a circular economy. This requires changes in how companies operate, including new ideas and plans, and redesigning products, services, and ways to sell them to last longer. These changes lead to what are called "circular business models."
Definition
The circular economy has many definitions and methods. In China, it is a government-led national goal, while in the European Union, Japan, and the United States, it is used to create community-focused environmental and waste management policies. The main goal of the circular economy is to reduce harm to the environment while the economy grows. A full definition is: "A circular economy is an economic system that aims to create no waste or pollution throughout the life of materials, from their removal from the environment to their use in industry and by consumers. It applies to all ecosystems. When materials are no longer useful, they return to industrial processes or, if treated properly, safely return to the environment as part of natural cycles. It creates value at different levels and uses the concept of sustainability fully. Energy used is clean and renewable. Resources are used efficiently. Governments and responsible consumers help keep the system working well long-term."
In general, circular development is a way to produce and use resources that helps build a self-sufficient and sustainable society that works with environmental resources. The circular economy changes the economy to be regenerative, meaning it creates value by reducing waste and environmental harm before problems occur, instead of waiting to fix them. 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, and restoring natural systems.
Other definitions and clear differences between linear and circular activities have been created 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, a circular economy changes this to a system that restores and regenerates resources. It uses reuse, sharing, repair, refurbishment, remanufacturing, and recycling to create a closed-loop system. This reduces resource use, waste, pollution, and carbon emissions. The circular economy keeps products, materials, equipment, and infrastructure in use longer, improving resource efficiency. Waste and energy can be used in other processes through waste valorization, either as components for industry or as resources for nature, like compost. The Ellen MacArthur Foundation describes the circular economy as an industrial system that restores or regenerates value through design.
Circular economy strategies can be used at different levels, from individual products 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 that reduces waste, pollution, and resource use. Similarly, circular cities use circular principles in urban planning, create local resource loops, and encourage sustainable habits. Less than 10% of global economic activity in 2022 and 2023 was circular. Each year, the world uses about 100 billion tons of materials, with over 90% of them being wasted. The circular economy aims to stop this by eliminating waste completely.
History and aims
The idea of a circular economy does not have a single starting point or one person who created it. This concept is connected to several areas of study, such as industrial ecology, biomimicry, and cradle-to-cradle design. Industrial ecology examines how materials and energy move through industrial systems, which is a key part of the circular economy. Biomimicry involves copying natural patterns and strategies to create human systems. Cradle-to-cradle design is a method of designing products and systems that considers their entire life cycle, from when raw materials are taken from the Earth to how they are disposed of at the end of their use. These connected ideas help shape the circular economy.
In the middle of the 19th century, an early effort to promote ideas now called the circular economy was led by the Society for the Encouragement of Arts, Manufactures and Commerce (now known as the Royal Society of Arts). As noted by economic geographer Pierre Desrochers, members of this group argued that profit motives, long-distance trade, and roles now rarely discussed, such as waste dealers and brokers, helped create more value from manufacturing and leftover materials.
In the 1968 book General System Theory, biologist Ludwig von Bertalanffy discussed growth and energy 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 to keep human life on Earth sustainable. He described the "cowboy economy" as a system where the natural environment is seen as limitless, with no limits on energy or material flows.
In the 1981 book Jobs for Tomorrow: The Potential for Substituting Manpower for Energy, Walter R. Stahel and Geneviève Reday-Mulvey explained how increasing labor could reduce energy-heavy activities, laying the groundwork for circular economy principles.
Simple economic models often ignored how economies and the environment interact. Allan Kneese, in "The Economics of Natural Resources," showed that resources are not endlessly renewable.
In the 1990 book Economics of Natural Resources and the Environment, Pearce and Turner described the shift from traditional linear economic systems to circular ones. They explained a system where waste from extraction, production, and consumption is reused as inputs.
In the early 2000s, China included circular economy ideas in its industrial and environmental policies, focusing on resource use, production, waste management, and life cycles. The Ellen MacArthur Foundation helped spread the concept in Europe and the Americas.
In 2010, the circular economy became more popular globally 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 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 way to address these issues. Key benefits include enabling economic growth without increasing pressure on natural resources, reducing dependence on foreign materials, lowering carbon emissions, reducing waste, and creating new ways to produce and consume goods. Companies support the circular economy because it can secure raw material supplies, reduce costs, minimize waste, extend product lifespans, reach new customers, and create long-term value for shareholders. A main idea behind circular business models is to create loops to recover value that would otherwise be lost.
A major concern is the permanent loss of raw materials in the linear economy due to increased disorder, or entropy. Waste production in manufacturing increases disorder, which worsens during product use and ends with even greater disorder in landfills. Because of this, resources are effectively "lost forever."
Circular development is closely tied to the circular economy and aims to build a sustainable society using recyclable and renewable resources, protecting people from waste, and creating a model that does not treat resources as infinite. This model focuses on producing goods and services while considering environmental and social costs. Circular development supports the circular economy to create societies that meet waste management and sustainability goals. It helps economies and societies become more sustainable overall.
However, some critics say the circular economy may overstate its benefits. They argue the concept has too many definitions, making it hard to understand and assess. Critics also say the circular economy ignores well-known scientific principles, such as the rule that matter cannot be created or destroyed. They point out that a future with no waste or infinite recycling is not practically possible. Additionally, the conversation often excludes perspectives from the Global South, making it less focused on environmental concerns than it claims. There is also uncertainty about whether the circular economy is more sustainable than the linear economy and what its social benefits might be. Other issues include risks from highly connected systems, which could cause widespread harm if they fail. When used dishonestly, circular economy efforts might be used for public relations by corporations, leading to "greenwashing" and not solving problems as hoped.
Sustainability
The circular economy is a system that is meant to be more sustainable than the traditional linear economy, which follows a "take, make, dispose" pattern. This system aims to use fewer resources and create less waste, which helps protect the environment. However, some people say these ideas are too simple and do not fully consider the complexity of real-world systems or possible trade-offs. For example, many studies on the circular economy focus less on how it affects people and communities. In some cases, new strategies, like buying more energy-efficient equipment, might be needed. Researchers from Cambridge and TU Delft found that there are at least eight different ways sustainability and the circular economy are connected. It is also important to note that innovation plays a key role in creating long-term development through circular economy practices.
The circular economy can apply to many areas, such as industries that use products, natural resources, and services. Researchers study these areas to better understand the challenges the circular economy faces. They also look at how to manage resources and waste more effectively. The circular economy includes products, buildings, equipment, and services across all industries. It covers both "technical" resources, like metals and fossil fuels, and "biological" resources, such as food and wood. Many experts support moving away from fossil fuels to using renewable energy and emphasize the importance of diversity in creating strong, sustainable systems. The circular economy also discusses how money and finance relate to sustainability and suggests new ways to measure economic success. One study shows that using modular designs could help make energy systems more sustainable. An example of a circular economy model is renting products instead of selling them, such as electronics or furniture. This allows companies to earn money from the same product multiple times, reducing the need to make more items. Recycling programs are often linked to the circular economy and are among the most common models used today.
According to Circle Economy, if the circular economy were fully used worldwide, it could reduce global emissions by 22.8 billion tons, or about 39% of all emissions in 2019. By 2050, using 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. This would be similar to removing all emissions from transportation today.
The idea of a circular economy was first introduced in 1966 by Kenneth Boulding, who compared it to a "closed economy" where resources are reused rather than wasted. His essay, "The Economics of the Coming Spaceship Earth," is often seen as the first mention of the circular economy concept, even though he did not use that term.
The circular economy is based on studying systems that work like living organisms, which are not linear but use feedback loops. Over time, the concept has grown to include ideas from other fields, such as "cradle to cradle" design, industrial ecology, and biomimicry.
In 1989, British economists David W. Pearce and R. Kerry Turner described how traditional economies did not include recycling and treated the environment as a place to store waste. In the 1990s, Tim Jackson helped develop scientific ideas about moving away from a linear system to a more circular one. His work, called "preventive environmental management," later became a call for change in how industries operate.
In 1976, Walter Stahel and Genevieve Reday wrote a report for the European Commission that described how a circular economy could create jobs, save resources, and reduce waste. This idea was later published as a book titled Jobs for Tomorrow. Stahel’s institute focused on making products last longer, reusing items, and avoiding waste. He also promoted selling services instead of products, an idea called the "functional service economy."
China included the circular economy in its national plans starting in 2006. The Ellen MacArthur Foundation later helped spread awareness of the economic benefits of a circular economy, combining different ideas into a clear framework. Supporters say the circular economy helps address the end of the era of cheap oil and materials and supports moving toward a low-carbon economy. This approach could help meet goals from the COP 21 Paris Agreement, which aims to limit global warming to 1.5°C.
The linear economy uses finite resources to make products that are not reused and end up in landfills or incinerators. In contrast, the circular economy takes inspiration from living systems, which recycle nutrients back into the environment. This idea is why the circular economy is often called "closed loop" or "regenerative." While different groups may use the term "circular economy" in various ways, they all share the same basic principles.
One important figure in the circular economy is Walter R. Stahel, an architect and economist who is often called the "father of the circular economy." His work laid the foundation for many of the ideas used today.
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 paid for by the Ellen MacArthur Foundation and created by McKinsey & Company. It was the first report of its kind to explore the economic and business opportunities of moving to a restorative, circular model. Using examples of products and analysis of the entire economy, the report explains the potential for major benefits across the European Union. It states that a part of the EU manufacturing sector could save up to $630 billion each year in material costs by 2025. These savings could boost economic activity in areas like product development, remanufacturing, and refurbishment. The report also highlights key steps needed to transition to a circular economy, such as developing skills in circular design and production, creating new business models, improving skills in managing material flows and reverse processes, and working together across different industries and sectors. A case study from the automotive industry shows the importance of applying a circular model throughout a company’s entire value chain, considering 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, examined how public policies might affect job creation by 2030. It estimates that without changes to current policies, 200,000 new jobs could be created, reducing unemployment by 54,000. With stronger policies, 500,000 new jobs might be created, reducing unemployment by 102,000. The International Labour Organization predicts that a global shift to a circular economy by 2030 could create 7–8 million additional jobs worldwide. However, other research suggests that some jobs in emerging economies might be lost as circular economy practices are adopted.
In the United States, Ranta et al. studied how institutions and barriers affect the circular economy in different regions, using a framework developed by Scott R. They analyzed two types of manufacturing processes: product-oriented and waste management. For the product-oriented example, they studied Dell, a U.S. computer company that was the first to offer free recycling to customers and to sell computers made from recycled materials. For the waste management example, they studied Republic Services, the second-largest waste management company in the U.S. The study identified factors that support or hinder the circular economy by analyzing indicators for each case and categorizing them as drivers or barriers.
On March 2, 2022, in Nairobi, leaders from 175 countries agreed to create a legally binding agreement to end plastic pollution by 2024. The agreement will address the entire life cycle of plastic and suggest alternatives like reusing materials. It is expected to help shift to a circular economy, reducing greenhouse gas emissions by 25%, as stated in the official announcement.
It is estimated that improving circular approaches in waste systems could help the waste sector achieve net zero emissions in the coming decades. Circularity is gaining attention in national policies. It was a focus of the 2024 COP29 United Nations Climate Conference in Baku, Azerbaijan. During the conference, Azerbaijan signed a Joint Resolution to promote global and regional collaboration on efficiency and circularity.
Product designs that increase durability, ease of repair, upgradability, and reassembly are key to transitioning to circularity. However, designers must avoid overdesigning, which can reduce overall sustainability. Standardization can help European businesses and consumers by creating innovative, sustainable, and competitive advantages. Designing for standardization and compatibility makes product parts and interfaces suitable for other products, aiming for multi-functionality and modularity. A "Product Family Approach" has been proposed to promote commonality, compatibility, standardization, or modularity among different products or product lines.
Some argue that emerging technologies, such as 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 negative effects on human health and the environment. Recycling should reduce environmental impacts of product and service systems, as measured by life-cycle assessments.
A study suggests that requiring recyclers of electronic waste, whether in or outside Europe, to meet quality standards could encourage better recycling processes and material recovery. Digital tools may improve corporate efficiency and reduce waste.
Initially, academic, industry, and policy efforts focused on developing technologies like recycling and remanufacturing. However, it became clear that these technologies are now more advanced than their implementation. To use them effectively for a circular economy, different groups must work together. This has shifted attention to business-model innovation as a key way to adopt circular technologies. For example, Rheaply is a platform that helps scale reuse within and between organizations by managing assets and supporting circular business models.
Circular business models aim to close, narrow, slow, intensify, and dematerialize resource loops to reduce resource use and waste. This includes recycling (closing loops), improving efficiency (narrowing loops), extending product use (slowing loops), increasing use intensity (intensifying loops), and replacing products with services or software (dematerializing loops). These strategies can be achieved through designing material recovery processes and circular supply chains. These five approaches to resource loops are seen as general strategies for circular business model innovation. The development of circular products, business models, and the circular economy depends on the properties of the materials used, which can either enable or limit circular practices.
Circular business models, like the broader economic model, can have different goals, such as extending the life of materials and products across multiple use cycles or using a "waste = food" approach to recover materials.
Strategic management in a circular economy
The circular economy (CE) does not change how businesses focus on making profits. Instead, it offers a different way for companies to achieve long-term competitive advantage while also dealing with environmental and social issues in the 21st century. Moving away from traditional, linear methods of production often helps companies develop new skills and strengths along their value chain, leading to better performance. This can reduce costs, improve efficiency, strengthen brand recognition, lower risks, create new products, and meet stricter government rules and the needs of environmentally conscious customers. However, even though many companies have successfully used circular solutions across different industries, and even though there are many opportunities when a company clearly understands which circular actions fit its goals, making decisions about the CE remains a complex process with no single solution that works for all. Many companies, especially smaller ones, still find the topic difficult to understand and believe circular strategies are not suitable for them or too expensive and risky to try. This belief is supported by recent studies, such as the Circular Readiness Assessment.
Strategic management is the area of business that helps companies carefully consider CE ideas and examine their operations to find or create opportunities for circular practices. Research shows that developing strategies for the circular economy is a difficult process that requires repeated cycles of planning and evaluation. A book titled Strategic Management and the Circular Economy introduced for the first time a structured process for making CE-related decisions, which includes three main steps: analysis, formulation, and planning. Each step uses well-known tools from 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 adapted to focus on the circular economy, helping companies ask new questions and consider new factors. Although this approach has not yet been fully tested, it is argued that all standard tools used in strategic management can be adjusted and applied to the circular economy. Specific examples include using the strategy direction matrix for product vs. market and the 3 × 3 GE-McKinsey matrix to assess 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 create, build, make, use, help, and end a system. Some industries with strict rules, like civil aviation, may use specific methods for these steps.
Complex and certified engineering systems include many everyday items, such as bicycles and household appliances.
The new framework called "Circular Lifecycle for Complex Engineering Systems" combines the traditional engineering life cycle with ideas from the circular economy. This framework encourages engineers to review engineering practices and use new ideas from the circular economy. It is not about showing material flow diagrams but instead focuses on important design rules. The framework has been updated to highlight key circular economy principles, which engineers consider at every stage of the life cycle. These principles include designing for user needs, using proven engineering methods to make products last longer, planning 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 amount of work done at each life cycle stage can be adjusted based on the product's complexity.
To use the circular life cycle for complex systems, engineering teams 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 important stakeholders in the supply chain at different levels of system and equipment design. It is important to note that 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, suppliers for subsystems and equipment are added to the platform and system design. Circular engineering principles are included in the platform's requirements during the "Innovate" stage of the engineering life cycle. As the life cycle continues, these principles should be shared throughout the supply chain. Each company should challenge its suppliers to create products and services that support circular operations and use of the engineering system.
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 fabric, and making clothes that last longer using recycled materials.
This system is a response to the current way the fashion industry works, which is called the "take-make-dispose" model. In this model, raw materials are taken from the earth, made into clothes, sold to people, used, and then thrown away. Fast fashion companies have increased how much clothing is bought and used, making the problems of this system worse. This model causes the loss of more than $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 poor pay and unsafe conditions. A documentary called The True Cost (2015) explained 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 fast fashion harms both the planet and people by relying on this system.
Some people believe that a circular economy can help the textile industry become more sustainable. A 2017 report called A New Textiles Economy listed four goals to create a circular economy: stopping the use of harmful materials and microfibers, changing how clothes are designed and sold to make them last longer, improving recycling by redesigning clothes and making recycling easier, and using resources wisely and switching to renewable materials. While 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 program lets customers bring worn clothes to be fixed and resold. Similar programs exist in Europe, where outdoor clothing companies help 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 services let people rent everyday clothes, baby clothes, and maternity wear. Some companies charge based on how long the clothes are rented, while others offer monthly subscription plans.
Research has shown that informal workers, like street vendors in India, play a role in extending the life of clothing by repairing and reselling used items. However, their main goal is to earn a living, not to help the environment. This is called a "livelihood-driven circular economy."
Construction is one of the largest sources of waste worldwide. A circular economy can help reduce the environmental harm caused by the construction industry.
Construction is very important to the European Union, providing 18 million jobs and contributing about 9% of the EU’s GDP. The main environmental problems in construction are the use of non-renewable resources and the creation of harmful waste, both of which are increasing. In the EU alone, people and companies produce over 2 billion tons of waste each year, mostly from construction, mining, and manufacturing. Each person in Europe creates about half a ton of waste annually, but less than half of that is recycled.
Cement production is responsible for 2.4% of global CO₂ emissions from industrial and energy sources.
Decisions about a circular economy can be made at three levels: operational (related to specific parts of production), tactical (related to whole processes), and strategic (related to the entire organization). These decisions can involve construction companies and construction projects.
Old buildings can be taken apart carefully, creating new materials for future buildings and freeing up space. Modular construction systems are useful because they allow buildings to be easily taken apart and reused later.
An example of a circular economy in construction is the use of walnut husks as natural abrasives for cleaning brick surfaces. These are made from crushed and cleaned walnut shells and can be reused. A study in a construction company showed that a circular economy can create new jobs, such as a "circular economy manager" for construction projects.
The automotive industry is also starting to use circular economy practices. A study in the heavy-duty and off-road industry looked at combining circular practices with lean manufacturing, a method that focuses on reducing waste and improving efficiency. While lean manufacturing helps use resources more efficiently, other steps are needed to fully close resource loops and make the system sustainable. A 2016 report by Accenture said that a circular economy could help carmakers improve competitiveness, increase revenue by 2030, and reduce costs by up to 14%. So far, this has included using recycled materials, rebuilding used car parts, and designing new cars with recycling in mind. Rebuilding used parts, like gearboxes, can reduce CO₂ emissions by 36% compared to making new ones. In the EU, only 75% of vehicles are recycled, leaving 25% to be thrown away. In the electric vehicle industry, robots help disassemble cars. A project called ETN-DEMETER in the EU studied 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 ideas to their vehicles.
Circular developments around the world
Since 2006, the European Union has focused on 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 December 17, 2012, the European Commission released a document called "Manifesto for a Resource Efficient Europe."
In July 2014, the European Union 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. It also 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 European Union increased its research funding for the circular economy significantly. Between 2018 and 2020, 964 million euros were spent on this research. 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% 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 laws, the EU's circularity rate was 11.5% in 2022 and is decreasing.
The 2012 "Manifesto for a Resource Efficient Europe" stated that the EU must transition to a resource-efficient and regenerative circular economy. It emphasized the need for systemic changes in resource use and recovery to support jobs and competitiveness. It also outlined steps like innovation, investment, regulation, and setting clear goals.
The European Union's environmental research and innovation policies aim to support the circular economy. These efforts are funded by the Horizon 2020 program, which is open to global participants. The circular economy is seen as important for economic growth in Europe, with a focus on sustainability, innovation, and investment in waste reduction.
The EU's circular economy plans are guided by its 2018 Circular Economy Package. Previously, policies in Brussels focused mainly on waste management, but less attention was given to eco-design, which is the first part of the circular economy cycle. To address this, the EU launched the "Ecothis" campaign to raise awareness about the importance of eco-design.
In 2020, the European Union released its Circular Economy Action Plan. This plan included 54 measures to improve Europe's global competitiveness, promote sustainable growth, and create jobs. These measures included optimizing raw material use, reducing waste, and lowering greenhouse gas emissions. The plan also aimed to develop a market for secondary materials and included areas like production, consumption, waste management, innovation, and monitoring progress.
The plan integrated existing policies and legal tools. It was supported by the European Economic and Social Committee 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 changes to the Circular Economy Action Plan, highlighting five key areas: batteries, construction and demolition, information and communication technology, plastics, and textiles. Two additional areas are 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 to support the circular economy.
- Belgium: Ranks second in circular material use and performs well 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 initiatives. Most leading countries in this area are European.
Critiques of circular economy models
Some people have criticized the idea of a circular economy. Corvellec (2015) said that the circular economy focuses on continuing economic growth while using less strict approaches to reduce negative impacts, but it is not the most extreme solution. Corvellec (2019) discussed the challenges of managing waste across different species and noted that waste producers cannot separate themselves from their waste. Waste has value that changes depending on the situation and is not always useful. Scatolic engagement, as described by Reno, compares waste to animal droppings, which can help different species communicate. This comparison highlights the difficulty of separating waste from its source and the changing value of waste over time.
Corvellec and Stål (2019) expressed mild concerns about take-back systems in the clothing industry, which aim to reduce waste before more serious measures are needed. Research by Zink and Geyer (2017) questioned whether the circular economy focuses too much on engineering solutions and ignores the economic aspects. They also raised doubts about whether reusing materials and products truly stops the need to produce new ones.
Other critics, like Allwood (2014), pointed out that the circular economy has limits, especially when demand for resources increases. McMillan et al. (2012) noted that the circular economy does not fully consider how market forces influence waste management. Zink and Geyer (2017) called this a common idea that market forces will eventually replace the use of new materials. Korhonen et al. (2018) argued that the values, social structures, and cultural beliefs behind the circular economy are not well understood.
The circular economy also faces challenges related to the laws of thermodynamics. According to the second law, all natural processes increase entropy, making them irreversible. This means that in practice, achieving a perfectly circular economy would require either accepting some waste (which creates 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 without significant energy use.
Additionally, the circular economy has been criticized for not addressing social justice issues. Many circular economy plans do not explain how the control of technologies or the distribution of benefits and costs will be managed. Some scholars and groups prefer the term "circular society," which emphasizes sharing knowledge, power, wealth, and resources in fair and democratic ways, rather than just improving resource efficiency.
Finally, some argue that the circular economy should focus on well-being rather than economic growth. For example, improvements in product efficiency might be offset by increased consumption, which can only be addressed through measures like limiting the use of harmful products or emissions.
Related concepts
Circular business and economic models have shared ideas with other systems. Janine Benyus, who wrote Biomimicry: Innovation Inspired by Nature, describes biomimicry as studying natural designs and using them to solve human challenges. For example, studying a leaf to improve solar cell technology is one way this works.
The blue economy refers to using ocean resources in ways that support economic growth, create jobs, and protect ocean ecosystems. It focuses on balancing human needs with the health of marine environments, ensuring resources are used without waste.
In his 2010 book, Gunter Pauli, a former Ecover CEO and Belgian entrepreneur, describes the blue economy as a shift toward using locally available materials, low-energy methods, and finding ways to generate income at every stage 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 reduce waste, while also creating jobs and using resources more efficiently.
Industrial ecology studies how materials and energy move through industrial systems. It looks at how different industries can work together in an "industrial ecosystem" to create closed-loop systems where waste from one process becomes a resource for another.
Resource recovery involves taking waste and turning it into useful products. This reduces the amount of waste sent to landfills and helps extract value from materials that would otherwise be discarded.
A similar concept is used in Japan.
Understanding how parts of a system work together is important. Each element is seen as fitting into its environment, infrastructure, and social context.