What is the circular economy?

A systems approach applied to our economy would work continually towards strengthening and regenerating the system, rather than degrading it. All resources, such as materials and energy would be treated as valuable capital, either kept within the system or safely returned to the system to generate further economic, social or environmental value. And it is this type of thinking that is the starting point for the circular economy.

In a circular economy, goods and resources flow around the system in a series of cycles that aim to either retain economic value or regenerate the biosphere (environment). Goods are made to be made again and the whole system is powered by renewables. In comparison to making goods from scratch, energy demand is reduced through processes such as repairing and remanufacturing.

The key here is that everything is designed to fit this new system. This approach moves the thinking upstream, rather than trying to solve problems downstream, when it is often too late. In doing so it requires designers, entrepreneurs, governments and businesses of all sizes to collaborate and re-strategise to shift the system to be able to make the most of the opportunities the circular economy offers.

Analysis by the Ellen MacArthur Foundation and McKinsey & Co shows that applying circular economy strategies in just five key areas (cement, aluminium, steel, plastics and food) can eliminate 9.3 billion tonnes of CO2e by 2050, which is the equivalent of cutting current emissions from all transport to zero. As well as these environmental benefits, the circular economy represents an innovation and business opportunity worth trillions of USD, with additional benefits in terms of health and employment.

We’ll look more closely at all of these benefits as the course progresses.