The term “circular economy” has now entered everyday speech but the essential message – the preservation of the value of natural, cultural, human and manufactured assets – is virtually absent from the political debate.
What in 1976 I called an Economy in loops is aimed at preserving the quality and use-value of infrastructure, buildings and goods as long as possible – through reuse, repair and remanufacture accompanied by upgrading to keep pace with changing technical and aesthetic standards; and preserving the quality and purity of resources of end-of-life objects.
At the end of the day, the main winners are the environment and society. What it leads to is a reduction in carbon emissions across the entire production chain, as well as a reduction in the need for raw materials, including water. Moreover, the repair shops that offer low-cost alternatives to new goods are also opportunities for job creation and a reindustrialisation of regions.
The idea of an Economy in Loops is to build inertia into the management of existing goods: wherever possible shorter journeys with as little handling of the goods as possible, and in the following order of priority: renounce by doing without, reduce, reuse and repair. Anyone using an artefact is supposed to look after it, to repair it, and once one’s made use of it, to hand it on or sell it to someone else – second-hand clothing is a good example. Rather than buying new things, we can decide to share and to borrow, as for example with tool libraries.
If done on an industrial level, the is called the era of ‘R’ of the Circular Industrial Economy: remarket, repair, remanufacture objects. This is the most sustainable strategy because it preserves the resources that went into production from mine to the point of sale, which remain embodied in the objects as long as these are in use.: water, materials, energy and CO2 emitted.
This requires skills and people very different from those used in the “linear” economy where goods are produced, sold and after use thrown away. The circular economy relies on services with a large manpower component, supplied locally and in real time – the production of stocks of services is impossible – where the customer and the defective goods happen to be.
Next is the era of ‘D’ De-links material mixes by de-polymerisation plastics, de-alloying metals. It recovers pure atoms, molecules and fibres for reuse in production. However it is subject to entropy and does not preserve the embodied resources that went into producing objects.
The third loop is invisible, the liability loop. For manufacturers the circular industrial economy offers the opportunities of a radical/major change of business model. Instead of manufacturing goods faster and selling them more cheaply, the idea is to produce goods that last for as long as possible and sell their use accompanied by service contracts for maintenance and buy-back.
Manufacturers thus become fleet managers who minimize life-cycle costs including disposal. To do this, products have to be designed up-stream so as to lend themselves to selective retrieval of standardised component parts and materials. And manufacturers have to shift their revenues from the Point of Sale to the use phase of objects.
Fleet managers of objects exploit the efficiency of the linear production model, but in addition sufficiency and systems solutions to maximize their profit.
The industrialised countries need to reduce their consumption of resources and energy by a factor of 10, that is by 90%. This is their only way of enabling the inhabitants of poor countries to satisfy their basic needs regarding health, food, housing, security and mobility, without increasing the global mass of infrastructure and goods
In 2020, this total anthropogenic mass of objects (infrastructure, buildings, goods), produced and manufactured, already exceeded the planetary biomass. If this anthropogenic mass continues to increase (the amount of new anthropogenic mass doubles every 20 years at the moment), the biodiversity and biomass of our planet will inevitably dwindle, with catastrophic consequences for the human species. Global consumption of fossil energy and emissions of carbon are increasing at the same rate. According to the OECD and IEA, the production and consumption of fossil energy is being subsidised to the tune of five thousand billion dollars a year in order to reduce the cost of transporting what is produced globally and to reduce the cost of heating and vehicles for low-income groups.
For Switzerland, the Circular Economy offers further advantages: since, apart from electricity, the country possesses no resources, our reliance on imports will fall sharply thus increasing our self-sufficiency and resilience.
Founder-director of the Product-Life Institute (Geneva, 1983), the oldest consultancy in Europe on sustainable strategies and policies. He works on all continents with SMEs, corporate clients, academia and government agencies, to promote the opportunities of a circular industrial economy and a performance economy. MA in architecture from ETH Zurich (1971). Visiting Professor, Faculty of Engineering and Physical Sciences, University of Surrey. Full member of the Club of Rome.
From 1986 to 2014, he was also Director of risk management research and Deputy Secretary-General of the Geneva Association, a thinktank of the CEOs of the 100 biggest (Re)Insurance Companies worldwide. www.genevaassociation.org