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The Circular Economy

A path to sustainability?

Written by S. Muzaiek, J. M. S. Merico

Paper category

Bachelor Thesis

Subject

Business Administration>General

Year

2019

Abstract

Bachelor Thesis: The origin of circular economy The origin of the term circular economy is controversial (Murray et al., 2017), but it can mainly be traced back to environmental and ecological economics, as well as industrial ecology, IE. Several authors including (Ghisellini et al., 2016), (Murray et al., 2017) and (Geissdoerfer et al., 2017) attribute the introduction of the concept of circular economy to environmental economists Pearce and Turner (1989) Describes how natural resources affect the economy by providing inputs for production and consumption and sinks of output in the form of waste (Geissdoerfer et al., 2017). They describe the transition from a traditional linear economic system to a closed system, which is the result of the law of entropy or the second law of thermodynamics, which determines the dissipation of matter and energy (Ghisellini et al., 2016). Stahel and Reday (1976) also first mentioned the closed-loop economy (Murray et al., 2017) to describe industrial strategies that prevent waste, create regional employment, resource efficiency, and dematerialize the industrial economy. However, the works of Stahel and Reday (1976) and Pearce and Turner (1989) are rooted in the previous research of ecological economist Kenneth Boulding (1966), which described the earth as a closed circulatory system with limited assimilation capacity. And inferred from this that the economy and the environment should coexist in balance (Ghisellini et al., 2016; Geissdoerfer et al., 2017; Murray et al., 2017). Finally, industrial ecology is considered to be the largest sustainable economic movement, as the cornerstone concept that emerged as the concept of circular economy. IE views industrial production as a more complex and interdependent system, rather than just a set of independent inputs and outputs (Murray et al., 2017). IE is the opposite of the mainstream view, that is, the environmental impact of industrial systems should be analyzed by separating the source of influence (industrial system) and the receptor (environment) (Ghisellini et al., 2016). Industrial ecology helps to better protect raw materials and incorporate waste management into the energy and material sources of industrial production, which strongly embodies the concept of circular economy (Ghisellini et al., 2016). As a concept today, circular economy mainly comes from the legislation of the above-mentioned sustainable thought schools (Murray et al., 2017). CE is currently promoted by many governments and institutions around the world. Companies and foundations (most notably Ellen MacArthur) regard it as a sustainable economic growth method (Korhonen et al., 2018). 2.3 Implementation of Circular Economy When reviewing the CE concept, Y. Kalmykova et al. (2018) proposed that the model draws on concepts from several different environmental and engineering fields, although it obviously lacks a generally accepted definition of CE, and there is no standard for analyzing cases as CE. This in turn hinders its implementation, as there are currently a lot of different methods. Kirchherr et al. (2017) After summarizing the 114 fundamentally different definitions of CE available, it was concluded that CE means “different things for different people”. Kalmykova et al. (2018) further emphasizes the different ways in which the Ellen MacArthur Foundation has defined the term. First, define it as a model in which material flows are kept circulating and can only enter the biosphere when they are biological nutrients (EMF, 2012). A model of intentional recovery; designed to rely on renewable energy; minimize and eliminate the use of toxic chemicals; and eliminate waste through careful design (EMF, 2013). Finally, as an economy that provides multiple value creation tools, these tools are decoupled from limited resource consumption; in a circular economy, growth is achieved by increasing the value of existing economic structures, materials and products (EMF, 2015) . However, several authors including (Zink and Geyer, 2017) and (Murray et al., 2017) agree that the core concept of the circular economy is the classic reduction, reuse and recycling, or so-called “3R”. Research by Kirchherr et al. (2017) has also led scholars and practitioners to believe that most of the 114 definitions of CE can be regarded as a general term for 3R. In this sense, Bocken, de Pauw, Bakker, and van der Grinten (2016) developed a resource recycling framework, which is based on different business strategies to solve the circular economy, conforms to 3Rs, and may help understand the implementation of different CEs . They are shrinking, closing and slowing down the resource cycle (Appendix 2). Narrowing the cycle refers to the efficient use of resources by using fewer inputs to deliver the same product. As Boken et al. (2016) believes that loop reduction has been commonly used in linear systems as a form of reducing input costs, and since it does not imply any modification to the aftermarket use of resources, they do not regard this strategy as CE is used alone, but as a supplement to the other two. However, shrinking the cycle is often used as a synonym for eco-efficiency, which permeates many definitions of the circular economy and aims to simply reduce the amount of resources put into production (Kirchherr et al., 2017). Read Less