Infinity or Beyond

9 min readMay 4, 2021

Issue 3 — Limits of the Circular Economy theory & how we move past them

Takeaways

1) Global resource extraction is predicted to double by 2050 while an estimated 60% of current waste going into landfills is recyclable or reusable

2) A circular economy means shifting global systems of resource use, recovery, and design at an unprecedented pace

3) Ecological systems work within the boundaries of natural laws, and circular economy models do not currently account for them broadly

4) The Fourth Industrial Revolution and the Sharing Economy are essential to our next phase; possibly opening up $4.5t by turning waste streams into income streams

I would take a gander that this time last year, more people were engaged in the art and science of sourdough bread making than were partaking in such activities in the dark ages. After an indulgent doom scrolling sesh, many emerged from dark bedrooms and began carefully tending to yeasty jars, every 12 hours measuring out just enough flour and looking for those sweet little bubbles of fermented success. Then the glorious day came to actually bake a loaf of bread by adding just water and flour and voila — DIY sustenance. Even through a modern day apocalypse, you could feed yourself with minimal inputs. And that is a satisfying thought.

Much like this yeasty, bubbly jar of comforting carbs, the circular economy is one of continuous giving. The theory designs waste out of the system, taking nothing new from the earth and using what we already have to increase the quality of life for all humans. It combines resource efficiency, climate mitigation, and sustainable development together in a one-two (three?) punch.

Circular what?

Over the last half a century, the increasing availability of raw materials have lifted billions of people out of poverty. Natural resources are extracted from the earth, processed into parts, assembled, distributed, sold, used, stored in a garage, and eventually throw away. With a heavy climate footprint to boot.

According to UNEP, about half of all greenhouse gas emissions, 9.3 billion tons, are attributed to resource extraction and processing.

I could probably have you scrolling for hours with examples of how these resources are wasted.

Energy is wasted as heat, food rots into methane, precious metals sit in perpetuity next to used diapers in landfills, waste water is only marginally recovered (when financially feasible), construction and demolition waste is thrown out beyond belief (in just one year, C&D waste accounted for almost twice the municipal solid waste in the US !!) … it is truly an endless list.

Furthermore, I have learned the circular economy theory distinctively classifies embedded value as something not to be wasted. This is referring to the inherent value within a product or materials life. For example, value capacity is wasted when you buy a second pop socket because it has a hot pink cheetah print on it (i.e. your old one is not getting to live its best life) (also, cmon, who actually needs a pop socket). Lifecycle value is wasted by not fixing something before replacing it. This one runs deep because 1) cheap things aren’t designed to be fixed 2) we are all a little too lazy to do it anyways 3) the tradesmen available to do it for us are disappearing into the ether 4) cheap things are cheap to replace.

A circular economy is a way for us all to envision a new cyclical flow of energy and materials from soup to nuts across all industries and throughout all households. Yes I too sort paper and plastic and compost and buy recycled pop sockets (jk) just as much as the next conscious consumer, but the theory of a circular economy goes far beyond what is within an individuals reach.

To avoid systematic ecological collapse, a fully realized circular economy looks like completely shifting how we reuse (and therefore use) resources, how products are designed to be reverse engineered, and how we can link industry supply and output chains. It will require an enormous cultural shift in what we think of as “value”, within a time period that has historically never been achieved.

Proponents of the circular economy would grace this pessimism with the idea of “decoupling”, a model that separates economic growth from environmental and social impact. Decoupling can look like reducing the use of resources per unit of economic activity or maintaining economic output while reducing negative externalities

Yet research on the reality of decoupling growth from natural resources claim that the likelihood of achieving absolute decoupling is slim.

Where we are: the circular economy is still stuck in the canal

Currently our world is only 8.6% circular.

Around 90 billion tons of natural resources are extracted every year to support the global economy, including everything from food to fuel to water to metal to wood. Based on current trends, that number is expected to more than double by 2050.

It goes without saying that inequity is baked into these numbers, with most extracting and processing happening in poor countries, then shipped internationally (in what we have just found out to be a very delicate system of trade) for use in first world countries. The irony of the recent Suez Canal ship full of cars and oil and goods stuck in a poverty stricken area in Egypt about sums it up.

Looking at the end of life of these resources (i.e. waste) in America, it is estimated that individuals throw away 5 pounds of trash a day, 1,825 tons a year, and 293 million tons as a country.

As a world, it is estimated that 2 billion tons of waste is generated annually. That’s the weight equivalent of 1,500 cargo ships every year (slightly less than enter the Port of Los Angeles annually). The folks at MIT have concluded that at least 60% of that waste is recyclable or reusable by today’s standards, and I’m not even addressing the other 40%. <sigh> Our collective journey to a sustainable materials revolution is just as stuck as the “Ever Given” was for 6 days, racking up billions (trillions in the case of the circular economy) of lost dollars in inefficiency and waste.

More than just waste

The cost of all this waste goes beyond the lost cost of unrecovered materials. The by-products, or economic externalities, associated with waste streams are typically classified as pollution. Which obviously is extremely problematic.

According to the Lancet Commission on Pollution and Health, the human cost of pollution adds up to $4.6t a year from disease and exposure to contaminated air, water, and soil.

At a cost of $4.6 trillion, the negative externalities on society and environment are too great to balance the marginal benefits of inefficient resource extraction to drive growth. Even though global GDP is currently measured at $2.3t a year, some economists theorize that the economy is actually shrinking. Even I can do this simple math by subtracting the measured $4.6t cost of pollution minus $2.3t in GDP. This has been coined “uneconomic growth”, and many do not necessarily advocate for circularity or decoupling as a great solution. For the record, I did not intend to find so many limits within the circular economy. I really want it to work.

Circular economy and its holes

At the heart of this neat and tidy theory, the circular economy is the actor in which economic decoupling of growth from harm actually happens. But as it stands now, (and pardon the overstated generalization) the societal values of cheap consumption, convenient living, and price driven behavior are massive barriers to change.

Some economists liken the transition to a circular economy as sitting at 20,000 feet in an airplane and then magically transforming into a winged creature mid-flight.

But where are the sprinkles, Underwood? I’m here for sprinkles darnit!! Below I’ll line out what I take as the three biggest limits of the theory, and then (only then), the possible drivers moving it forward.

Limits of the physical universe

There are laws of physics that at the molecular level effect the ability of a material to be reused. The circular economy is built on the idea that everything cycles through an infinite system of reuse in a closed loop system. In reality, natural laws of thermodynamics and entropy effect the breakdown of physical flows of energy and matter within that cycle, resulting in reduced material, byproducts, and unintended consequences. For example, solar panels can only harness about 86% of solar energyand plastic can only be recycled two or three times. If the economy continues to be counted by GDP and not by the limits of materials or energy flow, then these consequences will build up over time.

Limits in a price competitive market

Models and systems designed for reuse and remanufacturing will always be in competition with raw and lower quality materials. Sometimes the driver is price (recycled goods can be more expensive than raw materials) and sometimes the driver is high demand. Steel, for example, is currently the most recycled product, clocking in at about 88% recycled globally, and its by-products like slag, water and gasses are almost 90% reused (awesome). However, as the total consumption of resources is growing at about 3% each year, there isn’t always enough recycled, cheaper steel to meet demand. There will be price competition between existing and new circular materials.

Limit of time

Even with the decades of technological advances we have seen over the past 50 years, global demand of resources has continued to increase and not decline as the decoupling theory would imply. The enormity of the reductions required to hit a sustainable carrying capacity of the planet (90% of current impact rates by 2050) is almost implausible within 29 years. Decoupling the economy from the environment in a closed loop overstates the degree of separability of production from resource recovery. In fact many think of decoupling as a “technofix” approach, and its lofty goals and principles ultimately encouraging continued growth of production and business as usual under a veiled effort to be circular.

But donut holes are round! (oh how meta)

The circular economy can be fostered out of many growing scientific fields including (but definitely not limited to) industrial ecosystems and industrial ecology, biomimicry, the performance economy, natural capitalism, and zero emission energy systems. This research can spur innovation as ideas and concepts evolve from lab to manufacturing plants with the aid of enthusiastic financing options.

In their book, “The Circular Economy Handbook”, the firm Accenture states the need for “advancements in technology” to move from downcycling to upcycling, and pairing that with aggressive policy for material shifting. I for one am a fervent advocate of innovation, and there is a massive call out to the innovation economy (founders, funders, corporate RD&D) to make this shift possible, for sure. But it’s just not enough to band-aid each massive industry barrier with the promise of “advancements”.

The systematic change necessary must actively chase these advancements, not treat them as risky, underdeveloped market solutions.

There is one way to shift this from a bottom up to a top down priority, and that is the idea of a Fourth Industrial Revolution. It is described best as the blurring of boundaries between the physical, digital, and biological worlds. It will utilize advancements in robotics, blockchain, Internet of Things, AI, quantum computing and more to allow for the tracking of materials and products along large supply and demand chains. As these advancements get cheaper, the companies and cities involved in these value chains begin to recognize that one companies output is another’s input. A “materials passport” could catalogue the resources life.

During a Fourth Industrial Revolution, we can start to see how circular economy tactics like product use extension, reverse logistics, and resource recovery become feasible at a large scale. These tactics can open up a $4.5t opportunity for economic growth as corporations start to see waste streams as income streams.

While I am focusing here on the relationships and processing of materials at large, the sharing economy plays an equally large part. Think of the sharing economy as more than ZipCar or VRBO. For example CaaS is a heating and cooling as a service business model that centralizes the operation and ownership of HVAC equipment. As there are a lot of people who cannot afford to upgrade or start using HVAC units, and this company will install one at your house and charge a monthly bill, taking care of all operating costs, maintenance, and upgrades for you. Its like Rent the Runway for HVAC.

In 2009, AirBnB was a bit of an outrageous concept (let a stranger stay in my guest bedroom?) and a mere decade later it has upended the business models behind behemoth global hotel chains. From this perspective, fast shifting of values is possible.

Conclusion

It’s easy to think of the circular economy as recycling on steroids.In reality, implementing global circular systems is an incremental set of small systematic changes across supply, operations, departments, and customers. It involves a massive value shift from the beginning to the end of our currently linear “make, take, waste” product chain to transform the entire system.

But creating a global circular economy is not a sidecar strategy. It is one of the most successful strategies making headway in boardrooms across the world with any hope of gaining traction. The advancements of the Fourth Industrial Revolution paired with blooming fields of academic study, heightened attention and investment in the space, and a relatively fast paced cultural shift through the popularity of the sharing economy might bring us closer to finding this loop.