How the post-COVID economy can change from a line into a circle

Around the globe, government thinking is turning to how to rebuild national economies after long closures during the pandemic. This rethink means a chance to restructure economies, aiming for a swift bounce-back but also addressing greater challenges, like climate change and waste.

Even before the pandemic, many in the sustainability sphere were discussing a circular economy – one that rewards using resources for as long as possible, rather than facilitating resource extraction and waste.

Alongside the post-Covid economic rethink, it may be the right time to ‘go circular,’ with emerging and proposed technology on the horizon that could speed the transition.

What is a circular economy?

Today, economic growth has a ‘take-make-waste’ pattern: We extract resources from the environment, use them to make products, then dispose of products and manufacturing waste in landfill. Circular economies by contrast, incentivize reusing resources and reducing waste at each step.

Co-Chair of UN International Resource Panel Janez Potočnik said a circular economy is how we could achieve “prosperity in a world of finite resources.” And it’s a big change, as Georgia Sherwin, a director at investment firm Closed Loop Partners told me: “The circular economy is the most significant restructuring of global commerce since the industrial revolution.”

Leading circular economy proponents The Ellen MacArthur Foundation say the circular economy has three parts. First, it limits natural resource extraction to what is needed, reducing the release of greenhouse gases and other pollution in the process. Second, it makes sure products and materials stay usable for as long as possible. Third, once goods are no longer usable, it has mechanisms to safely return biological resources to the natural environment and to make sure technical resources (like electronics) are reused in other products.

New technology reducing industry waste

It sounds great, but how does the circular economy work in practice?

In construction, Building Information Modelling technology helps builders make more accurate models of buildings to be demolished. This makes it easier to salvage valuable materials and reuse parts of an existing structure.

Aviation is developing a similar solution. “We’re working with an aircraft engine manufacturer to develop a digitally enabled ‘passport’ that helps identify and value materials, components and parts,” Professor Fiona Charnley, Associate Professor of Circular Economy at University of Exeter, UK tells me. “It means more intelligent decision-making based on economic and environmental value of materials, and more effective use of aircraft parts between lifecycles.”

A circular economy would also ensure less food waste. Some estimates suggest reducing food wastage could be worth at least 155 billion US dollars by 2030. Now in 15 countries, Too Good To Go is an app that lets companies like restaurants, bakeries and hotels sell surplus food cheaply online when it would otherwise have to be thrown away. Dynamic pricing uses AI to adjust supermarket prices, automatically discounting short-dated goods, reducing food waste 39 percent and increasing takings 10 percent in one supermarket chain.

Dr. Anne Velenturf, circular economy researcher at University of Leeds, UK says tech solutions must go beyond consumers. “In big business, digital solutions are key to keeping track of qualities of products that can be reused, remanufactured or recycled,” she explains. Take for example, smart factories that can manufacture products like modular housing.

Smart factories can calculate the optimum use of material inputs and records the size and shape of offcuts for later reuse, reducing waste by two-thirds compared with traditional methods.

Reducing the burden of packaging

The Ellen MacArthur Foundation projects the market for returnable packaging – packaging that’s washed and refilled – will grow by 60 percent to 59 billion US dollars between 2018 and 2026. The European Commission plans to make all plastic packaging in the EU market reusable or cost-effective to recycle by by 2030.

Polymateria has developed a new plastic called Cycle+. This plastic has unique qualities, being biodegradable after three years but recyclable during its lifespan.

Georgia Sherwin of investment firm Closed Loop Partners also talks of AMP Robotics, who are using “artificial intelligence and robotics to make sorting recyclables more efficient.”

The electronic waste problem

Technical materials, such as many electronic components, don’t fit as neatly into the circular economy as others. According to World Economic Forum and UN report A New Circular Vision for Electronics, electrical goods waste (e-waste) represents 2 percent of waste but 70 percent of hazardous waste bound for landfill.

Electronic goods manufacturers could play a role. Computer hardware firm Dell commit to a circular economy by making their products easier to repair and letting consumers and businesses return Dell e-waste for free. They’re also working to increase how much recycled material their new products contain – their new plastic components are about 35 percent recycled.

Global economy only 8.6 percent circular

While these innovations are promising, there’s still much work to build a truly circular economy. The Circularity Gap Report 2020 found the global economy is just 8.6 percent circular, meaning we use only 8.6 percent of resources more than once. Circularity has fallen from 9.1 percent circular in 2018, and demand for resources is expected to grow hugely in the coming years.

Dr. Simon Mair, ecological economist at University of Bradford, UK thinks we need to broaden our thinking to achieve a circular economy. “A truly circular economy must transform the goal of the system,” explains Mair. “As long as the goal is to make as much money as possible, it will be hard to keep resource use down.”

It’s also challenging to implement a circular economy, according to Professor Charnley. There must be new policy and legislation to encourage system-wide change, and common measures of progress. This change must come from leaders in government and business. “We must equip our future leaders and professionals with understanding of the circular economy and give them skills and capabilities to change systems.”