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Circular economy

What is the circular economy?

This term is used to explain the paradigm shift in the traditional production and consumption cycle that is giving way to reusing, renewing, and recycling materials and products in order to extend their useful life and give them added value. The circular economy is the opposite of the linear economy. Using it means reducing waste and greenhouse gas emissions worldwide, as well as expanding the cycle of materials within the economy. 

This model is based on nature’s cyclical operation, where everything has a new use and no waste is generated. The main goal is reducing the use of raw materials, reusing what already exists, and recycling any waste generated. 

What are the advantages of the circular economy? 

The circular economy offers a system for encouraging sustainability and reducing the use of finite resources. The advantages it offers include:

  • Economic growth: it favors the development of new business, innovation, and technological models that strengthen the economic value of natural resources.
  • Cost reduction: thanks to the use and value assigned to waste in the production process, which reduces investment in new raw material and the expense of transporting waste.
  • Creation of employment opportunities: not only in manufacturing but also in the development of the local economy, the emergence of small and medium-sized companies, as well as spaces for entrepreneurship.
  • Creation of ecological and innovative products: more durable products that mean savings for the end consumer. 

Why is the circular economy necessary?

Due to the finite nature of certain raw materials, natural resources are being depleted. This means that the definitive transition from the current linear production model to the circular economy is necessary, and it’s needed to:

  1. Reduce production to the bare minimum.
  2. Reuse the natural resources that have already been extracted and can be given another use.
  3. Recycle the raw material already used.

Another reason for implementing the circular economy is to improve environmental conditions. The constant extraction of raw material increases energy consumption and CO2 emissions, so a smarter, more sustainable use of these resources could considerably reduce carbon dioxide emissions. The aim of the European Green Deal is for it to be reduced by 60% by 2030. Developing the circular economy has to cut across all sectors of society to generate truly tangible changes. 

Differences between circular and linear economy

The linear economy is based on production, use, and disposal. This requires large amounts of raw material, as well as easily accessible energy for production, distribution, and consumption. In this model, consumption is short-term and doesn’t account for caring for the environment. Its main objectives are cutting costs (often through irresponsible use of resources) and increasing consumption while not paying attention to the negative impact of waste generation and the short life span of products.

The circular economy, on the other hand, strives to counteract these effects with a regenerative proposal: aiming for waste from a production process and consumption of raw material to take on a second useful life for other production processes. In addition to being environmentally sustainable, this is also economically favorable as it supports optimizing capital and being sustainable in the long term.

What is the global picture of the circular economy?

A study carried out by the Ellen McArthur Foundation and the McKinsey Center for Business and Environment shows that the circular economy will make it possible to generate a profit of €1.8 trillion by 2030, which means €0.9 trillion more than the linear economy’s current path. 

Similarly, a study carried out by the European Commission shows that more than 700,000 jobs could be generated in the EU alone for that same year.

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