An Introduction to Circular Economy

This chapter gives an overview of the entire book summarizing all 29 chapters, laying out its structure and linkage of different chapters. This book is purposefully styled as an introductory textbook on circular economy (CE) for the benefit of educators and students of universities. It provides comprehensive knowledge exemplified by practices from policy, education, R&D, innovation, design, production, waste management, business, and financing around the world. The book covers sectors such as agriculture/food, packaging materials, build environment, textile, energy, and mobility to inspire the growth of circular business transformation. It aims to stimulate action among different stakeholders to drive CE transformation. It elaborates critical driving forces of CE including digital technologies; restorative innovations; business opportunities & sustainable business model; financing instruments, regulation & assessment and experiential education programs. It connects a CE transformation for reaching the SDGs2030 and highlights youth leadership and entrepreneurship at all levels in driving the sustainability transformation.

Many of us have heard the phrases “circular economy” and “linear economy”. The notion of “circular economy” has been around for at least a few decades, starting with the “open economy” versus “closed economy” articulated by Kenneth Boulding in 1966 in his essay “The Economics of the Coming Spaceship Earth” (To download the essay, please go to: http://www.ub.edu/prometheus21/articulos/obsprometheus/BOULDING.pdf .). Since then, the concepts of feedback systems, cradle-to-cradle, closed-loop and many more essentially circular economy equivalent concepts have flourished and further developed into different branches in resource management, environmental policy, sustainable development and other subjects we are familiar with today from many university curriculums. It is, however, only in recent years, that the circular economy concept as an all-encompassing concept of future economic development model, gained global and cross-sector traction.

In the millions of years of evolution, nature has developed very efficient systems that move all elements and substances in cycles so that there is no waste. Humans, on the other hand, have recently developed industrial systems in the last few centuries that have a linear flow, extracting resources from nature and discarding them as waste after a brief period of use. Solutions to handle pollution have moved from end-of-pipe treatment to cleaner production and now towards a circular economy. A circular economy tries to move away from this linear model in trying to extend the life of products and services while minimizing burdens to the environment. To ensure that there are actually environmental benefits, a life cycle thinking approach is essential. This philosophy is developed in the chapter and life cycle assessment is introduced as an essential tool for environmental evaluation. Case studies on sugarcane biorefinery and packaging materials are provided to illustrate the utility of life cycle assessment in ensuring environmental benefits when approaching circularity.

Cities are centers of human and economic activity but also of resource use and waste. This gives cities both a critical and a promising role to support the transition to a circular economy by keeping incoming products and resources in the loop. A circular city is a place, where people share the resources they have, facilitated through business models that avoid losses and build on maximizing resource productivity. This requires a redesign of biological and technical material cycles in a way that their value can be maintained at the highest possible level for as long as possible. This chapter addresses questions such as: What could a circular city look like? What does this mean in practice? Where can we already see a transition? And what can urban policymakers and other actors do to realize circular cities? In this chapter, we will explore the resource streams flowing into cities, their main challenges and opportunities, solutions to close biological and technical cycles, the ways to measure progress, the actors and their roles within the circular city fabrics, and finally, a case comparison of circular city practices.

Industry is the propeller for the establishment and development of modern society by creating more human-dominated material and energy flows to transform resources into products or provide services. With the expansion of scale and variety, the industrial system has also laid its many negative marks in the natural environment systems. Thus, we need to reshape traditional industrial systems into more green, low-carbon, and circular ones according to circular economy principles. This chapter covers the following three aspects: (1) the hierarchical and circular structure of industrial ecosystems; (2) circular transformation strategies and practices, including eco-design at the product level, cleaner production at the process level, eco-industrial parks at the park level, sustainable industrial transformation at the regional level; (3) policy instruments of extended producer’s responsibility.

Interaction between industry and environment is crucial for industrial business performance as environmental impacts are constantly increasing pressure on industrial businesses. The creation of eco-industrial parks aims at transforming industrial systems into industrial ecosystems by including some measures like infrastructure and material/energy flows sharing. The introduction of industrial symbiosis scenario in which one firm’s waste becomes another firm’s feedstock represents a further development of eco-industrial parks design. This principle may be extended to cities and, doing so, an integration of socio-economic and ecological systems will be promoted. At the industrial park level, the practice of the circular transformation through waste exchange enhances circular economy. The application of the same principles to cities promotes the circular urban metabolism, where the conversion of natural resources into society occurs with zero-waste production.

The area of circular economy in terms of organic waste in agriculture and food sector has always been challenging without an effective and efficient mechanism of collection and processing into value-added products. There is no circularity in food and agriculture unless the waste management process (for both production and consumption) is able to produce value-added and financially viable products, services and cash. Natural resources are used to grow agriculture products which are processed into food, bio-based materials and energy for consumption. In this process of production and consumption, waste is generated from post-harvesting, post-processing, pre-consumption and post-consumption. In the context of food, there is pre- and post-consumption food waste. Pre-consumption food waste can be edible food which can be recollected and resold or distributed to the needed consumer. The post-consumption food, the leftovers, can be processed together with the green waste into compost and soil enhancer which is then used by the agriculture sector to produce more food, and in so doing, the economic cycle is complete from food back to food.

A set of trusted information in the form of material passports is necessary in order to understand the circular value of systems and materials in the built environment. Innovations such as digital technologies and material passports are useful circular economy transitional tools in managing the materials flows and decarbonizing the built environment. Material ppassports are datasets and reliable information consisting of the entire value chain—specifications of the materials used, and specific supply chains involved from the sources to producers, distributors and consumers or users; and technical facts to improve the re-use or recycling of materials and to enhance their residual value. This paper presents the material passports in the built environment for the transition towards a circular economy as well as the latest trends in research and practice.

Extensive usage of plastics causes environmental deterioration, global warming and health imperilments, costing the economy around $139 billion annually. Conversely, from childcare products to coffins manufactured with plastics, they have become an integral part of our life. At this situation, banning the use of plastics is not sustainable. Therefore, it is necessary to espouse circular economy (CE) in plastic sector. Meaning, preventing waste by manufacturing products that are efficiently reusable, recyclable or recoverable and gradually replacing non-degradable with degradable plastics. This chapter focuses on the concept of CE in plastic industries, recycling and recovering methods of plastics, government frameworks and challenges faced for implementation of circularity. From the case studies reported in this work, though there are successful execution of circularity in few scenarios, it can be noted that the implementation of CE is still at infant stages, as large proportion of companies have yet not committed 100% circularity until 2025. This work also identifies that more advancements in research and technologies, more tax benefits and funding allocation, need for collaborative business models, boosting and advertising the demand for recovered products and increased awareness on social responsibility of consumers and manufacturers are still necessary for achieving efficient circularity of plastics.

Electricity is at the heart of modern economies and it is providing a rising share of energy services. Global demand for electricity is set to increase further as a result of rising household incomes, with the electrification of transport and heat, and growing demand for digital connected devices and air conditioning. Rising electricity demand was one of the key reasons why global CO $$_2$$ 2 emissions from the power sector reached a record high in 2018. In fact, as per the projections of International Energy Agency (IEA), electricity’s share in total final energy consumption is expected to increase from 19% in 2018 to at least 24% in 2040. One of the potentially effective approaches for providing universal access to electricity is community microgrids built on distributed energy resources (DER) such as photovoltaic (PV) systems and batteries. As DER can generate and store electricity locally, they can power microgrids. A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity. A set of microgrids can be interconnected together to form community microgrids. In a community microgrid (CM), prosumers and consumers can cooperate to generate, share and consume electricity. Such CMs minimise the use of fuels required by conventional power plants, reduce creation of waste, pollution and carbon emissions. Additionally, DERs such as solar panels reduce the need for fuels and manufacturing supplies for long periods as their expected lifetime is about 20 years. Moreover, in a CM, the excess energy generated by a producer can be shared with the other members of that CM thereby recycling the excess energy. In summary, community microgrids incorporate the principles of circularity or circular economy to enable universal access to electricity while reducing air pollution and thereby addressing the climate change.

This chapter seeks to provide a representative example of Life Cycle Costing (LCC) for building-integrated solar energy systems in Singapore. First, renewable energy is introduced from the circular economy perspective, to better understand its significance in promoting sustainability. Solar energy among all renewable energy sources is the most promising for resource-stressed tropical cities such as Singapore. For such densely populated built-environments, innovative energy systems such as the building-integrated photovoltaic (BIPV) systems serve as good options to capture and use renewable energy incident on large facade areas. To estimate the financial feasibility of implementing BIPV systems and the cost-competitiveness in comparison with conventional building materials, the LCC serves as an enabling tool to evaluate the viability of these energy systems as per the market need. A step-by-step illustration of the LCC analysis, based on the tool developed by the BIPV Centre of Excellence at the Solar Energy Research Institute of Singapore (SERIS), is provided as a case study. This highlights the significance of LCC in evaluating the economic benefits of a practical application of a BIPV system for a representative high-rise building in Singapore. The benefits of transiting toward such sustainable and clean energy systems from a consumer and environmental perspective are summarized as the conclusion of the chapter.

The world currently faces significant challenges in its adaptation to and mitigation of climate change in order to provide goods for the growing demand for food, water, and energy—key inputs into a modern society. Today, there is hardy industrial competition for resources that includes agriculture, heavy industry (mining, manufacturing, etc.), forestry, and light industries (electrical component manufacturing, textiles, etc.). Agriculture currently accounts for 70% of global water withdrawals; 30% of total global primary energy consumption, via production and distribution; and 51% of aggregate global energy use. Together, they produce considerable volumes of wastes, increase pressure on ecosystems, and impact local communities’ water, energy, and food security. These three sectors form the water, energy, and food security nexus and are integral to achieve sustainable development goals. In extractive economies such as that of Chile, it is critical to understand how the water–energy–food nexus is linked to circular economy models of short production chains of agriculture and mining to transit to the circular agrofood system and green mining. As a country whose primary industries are agriculture and mining, Chile would be one of the world's five countries suffering from the highest water stress in 2040, and the World Resource Institute is forecasting Chile as having the worst distribution of water resources. Therefore, it is imperative to understand the complexities and linkage of both industrial activities, agriculture and mining, in determining the cross-spatial scale fluxes between water, energy, and waste. With this understanding, one may recognize the patterns and relationships between each of the variables and how they contribute to resource-based conflicts.

This chapter mainly focuses on the development of waste electrical appliances and electronic products/waste electric and electronic products (WEEP) management in China and its key effects to circular economy. China has experienced 5 stages since the 1990s when the collection and disposal of WEEP started. By trying different ways to deal with WEEP, China has found the possible route to manage it. The article discusses the progress, achievements, and the status of WEEP management in China (including the categories, dismantling capacity & technologies, operational mode, reuse, environmental, and social influences). We provide case studies on Aihuishou (China’s largest electronic products collection platform) and Guiyu (transformation of a well-known e-waste recycling town). China now is the country with the world’s largest WEEP dismantling and disposal capacity. The recycling of WEEP is also a microcosm of China’s circular economy.

The global volume of electronic waste is expected to reach 52.2 million tones or 6.8 kg per person by 2021. A recent UN report—A New Circular Vision for Electronics—highlights that the world produces as much as 50 million tons of electronic and electrical waste (e-waste) a year. However, only 20% of this is formally recycled, remainder 80% either ending up in landfills or being informally recycled. It is unreasonable to find an ethical recycler and it has been a major challenge to pledge to eradicate e-waste from planet. Apparently, upcycling e-waste could be exploited as compelling solution. The article discusses about upcycling as an alternate solution to e-waste crisis. There is an Inspiration Gallery in the end, which would motivate readers to start creating eco art.

Solid waste is the unseen side of the circular economy. Governments need innovative policy to create functional markets to keep waste generated within the supply chain. Transitioning to minimal or no net waste requires innovation to avoid compromising quality of life. This means transfer from the current linear thinking model with large expensive centralized infrastructure to discrete distributed chains of infrastructure and using the circular economy principles. Most developed countries have already initiated prevention of waste. The waste management hierarchy (reuse, recovery, recycling, thermal recycling and disposal) can be optimized by innovation. By creating smaller circular waste pathways closer to the source of waste generation, more expensive end of life solutions can be rightsized due to higher resource recovery rates (from 10% up to 80%). The best-case scenario for National level waste resource waste management is 67% material recycling, 25% thermal recycling, and 8% to sanitary landfills. Through further innovation in product design and business delivery models, the thermal destruction and landfill can be further reduced. Extended producer responsibility (EPR) schemes create higher resource recovery efficiency and can be revenue positive to Governments. Through public-private partnership models, these EPR schemes can be digitized to improve the efficiency of circular economy.

Circular economy is simply the economic system in which wastes are minimized and resources are best utilized. This approach is aligned with “Bioeconomy, Circular economy and Green economy (BCG)”, one of Thai government’s flagships for national social and economic development plan. In agricultural sector, circular economy concept has long been successfully adopted through waste minimization and renewable concept. Thailand is the ASEAN leader in bioenergy production. One important factor is the government’s long term renewable energy plan which has supported the implementation of bioenergy projects. Recovery as food, energy, fertilizer and other value added products from agricultural wastes are already in commercial practice in agro-processing industry, i.e. sugarcane and palm oil industry as good examples. These provide an excellent foundation to another step of circular economy where more value addition can be extracted along the value chain. On the other hand, achieving circular economy is still far for municipal solid waste (MSW), the more difficult one to manage. Although some fractions are recycled and recovered for energy production and other purposes, large amount of MSW is still not properly disposed. Incineration, which seems to be the best short term solution, often encounters local unacceptance due to environmental concern and the difficult operation due to poor quality unsorted wastes. For sustainable waste management under circular economy concept, considering and planning based on the whole life cycle of MSW as well as raising people awareness to change public behavior on waste generation will be needed for better and easier management.

Recycling of garments is difficult due to the complexity of blended materials used during manufacturing. There is also the logistics challenge of processing these used materials in cities where there are no factories. Added to all this is the sheer size of this growing problem. Environmental sustainability is an urgent global challenge. We not only need to come up with innovative technologies but also to scale up these innovations rapidly into viable businesses. New research paradigms and new business models are all necessary to materialize technology and innovation into viable and impactful solutions. We share our story of the accelerated development of innovative and scalable solutions in recycling used apparel through a public-private partnership. Our key innovations include a resource-efficient and low-cost hydrothermal materials separation system and an automated, intelligent, and chemical-free mechanical recycling system that enables us to process used garments into high-value raw materials for new clothes as well as new business model for scaling up the garments recycling.

In this chapter, we aim to inspire questions and discussion on why the circular economy is relevant to industries for ensuring sustainable growth and continuous improvement. We also will discuss some of the challenges faced by manufacturing industries in adopting circular economy practices, and how applied data analytics in the framework of Industry 4.0 can help in overcoming these.

Innovation can be magical. It has the potential to reduce the unprecedented resource stress on our planet while creating vast new economic opportunities for businesses to capitalize and prosper. With this promising proposition, business leaders are encouraged to design innovations that contributes to the betterment of society. This includes designing innovations for the circular economy, which is the centerpiece of discussion for this chapter. This chapter explores the dynamics of a successful innovation and discusses the current state of innovation for the circular economy. It further introduces the concept of Restorative Innovation—an innovation economic model that explains a pattern of innovation-driven growth for innovative solutions designed to restore our health, humanity, and environment. By the end of this chapter, readers will have a baseline understanding of innovation and the importance of designing innovation for the circular economy. Above all, readers will also appreciate the possibilities of creating and capturing positive value for both our economy and our society through Restorative Innovation.

Business leaders and governments around the world are increasingly looking beyond the linear ‘take, make, waste’ model of growth, with a view to making a strategic move towards an approach fit for the long-term. Research by the Ellen MacArthur Foundation and others has demonstrated the potential of the circular economy—a model that decreases resource dependence and increases prosperity. In addition to creating direct economic benefits for businesses and households, a circular economy represents a significant opportunity to help tackle global challenges such as the climate crisis, biodiversity loss and land degradation. This chapter examines the business opportunities of the circular economy in three key sectors: the food system in India; the built environment in China’s cities; and mobility in Europe. It further quantifies the economic, environmental and social benefits of these opportunities and explores what are the levers to bring them to scale.

Modern supply chain management has been shifting away from the traditional linear supply chain model of “take-make-use-dispose” as it is not environmentally sustainable. The circular economy principle brings forth circular supply chain to cope with the ecological threats caused by the linear supply chain by addressing material circularity. The fundamental concept is to prolong material utilization and reduce material exploitation, while capturing and recreating new values of the products and services along the supply chain. This chapter describes the basic principles of circular supply chain, as well as different circular supply chain models. Various circular value creation guidelines are presented to encourage new circular businesses. Bio-base materials which follow a different cycle from the traditional industrial ones are examined. Different performance measures of circular supply chain to assess how well different parties in the circular supply chain have accomplished are introduced. Implementation strategies and various technologies for the future circular supply chain are also discussed.

Business model is at the heart of every business. It is the way a company creates, captures, and delivers value and it is a prerequisite for a strategy to be implemented throughout an organization. Traditionally, value was considered to be purely financial. However, with increasing global environmental, social, and political challenges, we need to create a more sustainable society where economic growth is decoupled from resource consumption. In order to enable the transition to circular economy, businesses are expected to play a significant role in the shift to a circular economy by implementing circular business models.

The transition to a circular economy requires the mobilization of resources and investments that support the adoption and upscale of ecological design and new technologies and business models. Policy instruments, including economic instruments, play a key role in ensuring that the prices of goods and services reflect the economic damages or benefits associated with their production and use, thereby creating incentives for circularity. Such incentives can help create a more playing level field for innovative technologies and business models and play a key role in freeing and reallocating resources that are currently used in the linear model. Finance instruments will be instrumental to scale up funding in new business models to support the transition toward a circular economy.

Greenhouse gas emissions (GHG) during the life cycle of a product, a process, or a service are the major cause of global warming and climate change. The circular economy principle has been proven to help increase resource efficiency and reduce GHG emissions. From the life cycle concept, it is known that closing loops or circularity doesn’t always generate positive environmental consequences. To ensure that circular activities are actually environmentally beneficial, the calculation of life cycle GHG emissions reduction is essential. The calculation methodology based on Intergovernmental Panel on Climate Change (IPCC) guidelines and life cycle assessment standards is described in the chapter. Case studies on opt out of plastic cutlery and upcycled fashion footwear, both from the Asia- Pacific region, are provided to illustrate the detailed calculation procedure and the GHG emissions reduction from the actual circular economy practices.

Life cycle thinking is important for holistically measuring the environmental and economic costs and benefits of activities in a circular economy. This helps to avoid shifting problems among different stakeholders and different stages of the life cycle. Through methods such as life cycle assessment (LCA) and life cycle costing (LCC), the environmental and monetary flows of a product or service that passes through different life cycle stages and stakeholders can be mapped. This chapter focuses on LCC, a method for quantifying the economic performance of products, services, and other activities in a circular economy. We provide a brief introduction on the three types of LCC which are conventional LCC, environmental LCC, and societal LCC and their respective relevant stakeholders. This chapter mainly focuses on conventional LCC as its methodology can be applied directly in economic decision-making for consumers and businesses. The principles of LCC are explained and a step-by-step procedure is provided on how to conduct a conventional LCC of a product or service. We provide two case studies of a conventional LCC to help understand how the LCC methodology explained in this chapter is applied. Finally, this chapter discusses the relationship between LCC and LCA.

This chapter seeks to give a foundational overview of Environmental, Social, and Governance (ESG) metrics. The definition of individual ESG factors is first introduced to highlight sustainability considerations in businesses and how these can be considered and support circularity in business operations. The chapter further develops the concept that ESG reporting serves as an enabling tool with which the business operations can drive circularity and remedy the existing limitations of the linear economy in practice. The rise in ESG reporting from companies, and the ESG considerations of companies based on their disclosures are discussed. Incorporation of ESG factors into business operations is also evidenced through real-world case studies. The impact of ESG performance and the growing awareness of sustainability among businesses, consumers, and investors on the current investing trends and its contribution to embracing circularity is presented as the conclusion of the chapter.

Circular economy is considered as one of the important strategies to address the Sustainable Development Goals (SDGs). Its multi-stakeholder platform encouraging a partnership approach towards resource conservation, resource efficiency and resource recycling has been found to be promising. In many countries, policies and strategies on circular economy are formulated to build the recycling infrastructure, promote new business models and spur innovations, especially in responsible product design. India has been on a pace of economic growth. Transiting to circular economy is therefore very relevant to India to achieve its development goals without compromising on the resource security. The various missions launched by the Government such as Make in India, Zero Defect India and programmes like Smart Cities and Swachh Bharat Abhiyan (Clean India) resonate with the principles of circular economy. This chapter introduces the concept and evolution of circular economy. It explains the key 6Rs, i.e. reduce, repair, refurbish, remanufacture, reuse and recycle. Challenges faced in the upstream and downstream of the material flows are also described. Case studies that present successes in moving towards circular economy are included with a focus on India. Finally, the chapter ends summarizing the status and way ahead in India’s circular economy.

Taiwan has played a pivotal role in the global supply chain. However, the pride of “Made in Taiwan” is built on the backbone of imported raw materials and environmental cost. Thus, a transition to a circular economy is necessary. A transition roadmap is introduced to help explain how businesses can transition from a linear economy to a circular economy. Case studies describing the development of a circular economy in various industries, particularly food, textile, and construction are also provided.

Youth leadership driven by education is inevitably important for making significant realization of a Circular Economy (CE). The success of the circular economy global movement is deeply rooted in harnessing the potential of the youth in Asian region especially. Asia is known to be a major global manufacturing hub and waste generator with over 62% of global youth population. This chapter outlines the educational practices in CE across the globe with particular focus on CE educational programs, courses/modules offered in countries including Australia, Belgium, Canada, Finland, Germany, Italy, Thailand, UK, US, and others. Furthermore, it highlights the criticality of Asian region toward CE education; how a general education module offered by the STEAM Platform helped transforming youth, and how STEAM Platform builds on existing CE practices fostering youth leadership. Of note, the role of different stakeholders in CE education such as educational institutes, government organizations, industry, and Non-Governmental Organizations (NGOs) is equally essential for working in synchronicity to develop a holistic education program in effectively developing human resources and in particular leaders in driving the CE transition. We propose that knowledge convergence (STEM knowledge), skills & mindset (strategic communication, peer-to-peer learning, life cycle, and critical thinking), and entrepreneurial practices are complimentary for the transformation of youth leading toward practical implementation of CE.

Given the crisis humanity is facing today, this chapter urges all stakeholders to take coherent action today and tomorrow for the transition to a circular economy. To help readers visualize a circular economy of the future, it provides a scenario of a circular economy in a community where both biological and technical cycles are closed; renewable energy drives transportation, production, and consumption. The community take care of the health of themselves and their environment and practice 6 Rs (re-use, repair, refurbish, remanufacture, recycle and recover) along the life cycle of a product at personal and professional levels. Circular supply chain is mapped. The chapter further summarizes circular economy transition enabling factors such as life cycle thinking, materials passports, and ubiquitous digitization to become integral of industries and services. In addition, it addresses the challenges ahead and concludes on the importance of education for providing circular economy workforce.

The original version of the book was published with incorrect figure captions. The figure numbers and captions have been updated and author biography newly inserted in the chapter “Circular Economy Business Models and Practices”. The correction chapter and book have been updated with the changes.