According to Ellen MacArthur Foundation, a circular economy is restorative and regenerative by design, and aims to keep products, components, and materials at their highest utility and value at all times. The concept distinguishes between technical and biological cycles. As envisioned by the originators, a circular economy is a continuous positive development cycle that preserves and enhances natural capital, optimises resource yields, and minimises system risks by managing finite stocks and renewable flows. It works effectively at every scale.

The circular economy provides multiple value creation mechanisms that are decoupled from the consumption of finite resources. In a true circular economy, consumption happens only in effective bio-cycles; elsewhere use replaces consumption. Resources are regenerated in the bio-cycle or recovered and restored in the technical cycle. In the bio-cycle, life processes regenerate disordered materials, despite or without human intervention. In the technical cycle, with sufficient energy available, human intervention recovers materials and recreates order, on any timescale considered. Maintaining or increasing capital has different characteristics in the two cycles.

The circular economy rests on three principles, each addressing several of the resource and system challenges that industrial economies faces.

Principle 1: Preserve and enhance natural capital...by controlling finite stocks and balancing renewable resource flows.

This starts by dematerialising utility—delivering utility virtually, whenever possible. When resources are needed, the circular system selects them wisely and chooses technologies and processes that use renewable or better-performing resources, where possible. A circular economy also enhances natural capital by encouraging flows of nutrients within the system and creating the conditions for regeneration of, for example, soil.

Principle 2: Optimise resource yields...by circulating products, components, and materials at the highest utility at all times in both technical and biological cycles.

This means designing for remanufacturing, refurbishing, and recycling to keep components and materials circulating in and contributing to the economy.

Circular systems use tighter, inner loops whenever they preserve more energy and other value, such as embedded labour. These systems also keep product loop speed low by extending product life and optimising reuse. Sharing in turn increases product utilisation. Circular systems also maximise use of end-of-use bio-based materials, extracting valuable bio-chemical feedstocks and cascading them into different, increasingly low-grade applications.

Principle 3: Foster system effectiveness...by revealing and designing out negative externalities.

This includes reducing damage to human utility, such as food, mobility, shelter, education, health, and entertainment, and managing externalities, such as land use, air, water and noise pollution, release of toxic substances, and climate change.

While the principles of a circular economy act as principles for action, the following fundamental characteristics describe a pure circular economy:

Design out waste

Waste does not exist when the biological and technical components (or ‘materials’) of a product are designed by intention to fit within a biological or technical materials cycle. The biological materials are non-toxic and can be simply composted. Technical materials—polymers, alloys and other man-made compounds – are designed to be used again with minimal energy and highest quality retention (whereas recycling, as commonly understood, results in a reduction in quality and feeds back into the process as a crude feedstock).

Build resilience through diversity

Modularity, versatility, and adaptivity are prized features that need to be prioritised in a fast-evolving world. Diverse systems with many connections and scales are more resilient in the face of external shocks than systems built simply for efficiency—throughput maximisation driven to the extreme results in fragility.

Work towards energy from renewable sources

Systems should ultimately aim to run on renewable energy—enabled by the reduced threshold energy levels required by a restorative, circular economy. The agricultural production system runs on current solar income but significant amounts of fossil fuels are used in fertilisers, farm machinery, processing and through the supply chain. More integrated food and farming systems would reduce the need for fossil-fuel based inputs and capture more of the energy value of by-products and manures.

Think in systems

The ability to understand how parts influence one another within a whole, and the relationship of the whole to the parts, is crucial. Elements are considered in relation to their environmental and social contexts. While a machine is also a system, it is clearly narrowly bounded and assumed to be deterministic. Systems thinking usually refers to the overwhelming majority of real-world systems: these are non-linear, feedback-rich, and interdependent. In such systems, imprecise starting conditions combined with feedback lead to often surprising consequences, and to outcomes that are frequently not proportional to the input (runaway or ‘undamped’ feedback). Such systems cannot be managed in the conventional, ‘linear’ sense, requiring instead more flexibility and more frequent adaptation to changing circumstances.

Think in cascades

For biological materials, the essence of value creation lies in the opportunity to extract additional value from products and materials by cascading them through other applications. In biological decomposition, be it natural or in controlled fermentation processes, material is broken down in stages by microorganisms like bacteria and fungi that extract energy and nutrients from the carbohydrates, fats, and proteins found in the material. For instance, going from tree to furnace forgoes the value that could be harnessed via staged decomposition through successive uses as timber and timber products before decay and eventual incineration.

Thanks for your descriptive comments.

You are welcome!

The sustainable development goal 12: #SDG12 - Ensure sustainable consumption and production patterns lists development targets and indicators that are relevant for achieving a more circular economy (see first link for more details).  

On Twitter, I tag content on circular economy with #SDG12.

The second link is to a paper about the artefactual wheel work that I co-authored. It adds "non-material" dimension to product life-cycles. 

http://www.actor-atlas.info/role:sdg12

Conference Paper The artefactual wheel-work and the information infrastructure

Hi Mark

For our research group "The circular economy is a social, environmental, and economic paradigm, whose purpose is to prevent the depletion of resources and regenerate environmental resources through the closed loops of materials and to decrease the loss of energy in the process. The closed loop of materials can be achieved through eco-innovative solutions and products that can be reintroduced in biological and technical cycles. Thus, this circular mechanism makes an economic development model feasible by dealing with the fact that infinite growth is not possible, but social needs will not disappear. This economic model does not reject economic growth, but sets limits on the exploitation of resources; if human societies seek growth, they should be limited to the recirculation of resources and a minimum amount of emissions." 

We have developed this concept in our paper for the 22nd Annual Conference of the   International Sustainable Development Research Society (ISDRS).

Regards

Conference Paper Circular Economy: An economic and industrial model to achiev...

Hello Mark

here are my 2cents.

I see it as a necessary transformation that will invevitably touch everyone. My hope is for this transition to be as gradual and guided as possible. I see SMEs as very vulnerable, lacking both an understandng of CE financial benefits and the resources to change. It is great to finally see governments and intergovernmental organizations beginning to enforce environmentally responsible practices, but to me this is just one of their responsibilities. It is their duty to also facilitate change towards a circular economy in a way that does not disrupt the ecosystem of entire industries, benefiting only large MNCs or star-ups. In other words education, training, stimulus packages, tax breaks and other tools should be targeted to give sufficient time to SMEs to adapt.

Thanks for your feedback, I am passionate on this research area.