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Grodno, Belarus – October 2018: Modern waste sorting plant. Into drum filter or rotating cylindrical sieve with trommel or screen for sorting pieces of garbage into fractions of various sizes.
π Industry π Economics

Is the circular economy a rational utopia? 

Franck Aggeri
Professor of management at the CGS-i3* of Mines Paris - PSL
Key takeaways
  • The circular economy allows products and waste to find a new life, in the form of recycled materials or reconditioned products.
  • This system creates millions of jobs and economic wealth estimated by the European Commission at 1% of additional GDP growth.
  • However, recycling can only meet part of the needs insofar as we have a growing economy, which therefore requires raw materials.
  • Moreover, most companies are doing weak circularity: they are not changing their business model and are content with adjustments at the margin.
  • We need to move from weak circularity to strong circularity, by extending the durability of products and intensifying their uses.

How long has the concept of the circular economy been around? 

Although the idea is much old­er, the cir­cu­lar econ­o­my con­cept was pop­u­larised at the turn of the 2010s by the Ellen Mac Arthur Foun­da­tion (EMF). The lat­ter was instru­men­tal in pro­mot­ing the cir­cu­lar econ­o­my glob­al­ly, intro­duc­ing the con­cept in a main­stream report with McK­in­sey in Davos in 20121. This report had an imme­di­ate impact on all sec­tors (eco­nom­ic, polit­i­cal and social). In France, a Nation­al Insti­tute for the Cir­cu­lar Econ­o­my (INEC) was cre­at­ed in 2013 and Ademe pub­lished a first report on the sub­ject that same year2. But it is the FEM’s script­ed sto­ry that has undoubt­ed­ly made its mark. For this occa­sion, the Foun­da­tion drew up a mobil­is­ing sto­ry, which would make peo­ple dream while appear­ing real­is­tic, based on dia­grams, fig­ures, and quan­ti­fied sce­nar­ios. A sort of ratio­nal utopia.

The cen­tral point of this sto­ry, which con­trasts the old mod­el of the lin­ear econ­o­my with the desir­able mod­el for the future of the cir­cu­lar econ­o­my, is built on the idea of cir­cu­lar­i­ty rep­re­sent­ed by the image of the cir­cle, a sym­bol of eter­ni­ty in all civil­i­sa­tions. Applied to the cir­cu­lar econ­o­my, cir­cu­lar­i­ty means that after their death, prod­ucts and waste can find a new life in the form of recy­cled mate­ri­als, recon­di­tioned or repaired prod­ucts… and this, while cre­at­ing mil­lions of jobs and eco­nom­ic wealth esti­mat­ed by the Euro­pean Com­mis­sion at 1% of addi­tion­al GDP growth! In France, the first cir­cu­lar econ­o­my con­fer­ence, organ­ised in 2014, was an incred­i­ble suc­cess. Politi­cians, busi­ness lead­ers, econ­o­mists, ecol­o­gy advo­cates, social and sol­i­dar­i­ty econ­o­my actors, and pub­lic actors all gath­ered to cel­e­brate this new utopia! Unfor­tu­nate­ly, this is a very sim­pli­fied scheme… 

Why do you call it a “rational utopia”? 

First, it is not pos­si­ble to reuse every­thing, or to recy­cle end­less­ly. Mate­r­i­al inevitably degrades, and if you recov­er it to make some­thing new, you must add new mate­r­i­al, and/or ener­gy to obtain a new prod­uct. The same goes for prod­ucts: you can main­tain and repair them but, at some point, they will have an end of life. This is the prin­ci­ple of entropy. Sec­ond­ly, many prod­ucts have a “dis­per­sive” use, like fer­tilis­ers that are spread on farm­land or paints on walls that are irre­triev­able. It is also impos­si­ble to col­lect all waste. Some is lost in nature or gets mixed with oth­er waste because it is too small to be sort­ed and ends up in land­fill when it could have been recycled.

But even if you were to recov­er all the mate­ri­als, pri­ma­ry and sec­ondary, from the prod­ucts you make through future tech­nolo­gies, it would not be enough to fuel a grow­ing econ­o­my. To make the 1.5 bil­lion smart­phones sold world­wide in 2022, com­pared to “only” 680 mil­lion in 2012, almost 2.5 times as much met­al had to be extract­ed in ten years! Recy­cling can only meet part of the needs of a grow­ing econ­o­my. Schemes based on an infi­nite cir­cu­lar­i­ty where we would no longer need pri­ma­ry resources are there­fore wrong in this grow­ing world. A recent report by the Euro­pean Envi­ron­ment Agency (EEA)3 points out that there has been no decou­pling of the mate­r­i­al foot­print from GDP growth over the last 30 years. In oth­er words, the con­sump­tion of non-renew­able resources has grown at the same rate as the increase in eco­nom­ic wealth.

However, there are many companies that thrive on recovery, recycling, or reconditioning activities…

Yes, many ini­tia­tives are inter­est­ing, but scal­ing them up is very dif­fi­cult. To recov­er val­ue, one must first recov­er, then sort, then pos­si­bly clean up, then recy­cle or repair – all this with­in the frame­work of well-organ­ised chan­nels. If a link in this chain is miss­ing or fails, the cir­cu­lar­i­ty loop no longer works. Waste sort­ing cen­tres, for exam­ple, have dif­fi­cul­ty recruit­ing employ­ees since they are noisy, smell bad, there are risks of fire, etc. In short, the work­ing con­di­tions there are not good enough for them… More­over, ille­gal chan­nels thrive because they take what is valu­able in the prod­ucts and throw away the rest with­out bear­ing the costs of clean­ing up.

So how can we move from utopia to reality?

We need to dis­tin­guish between weak and strong cir­cu­lar­i­ty. Most com­pa­nies prac­tice weak cir­cu­lar­i­ty: they do not change their busi­ness mod­el and are sat­is­fied with adjust­ments at the mar­gin. They opti­mise their process­es, and pos­si­bly car­ry out main­te­nance and recy­cling, but with­out giv­ing up growth in pro­duc­tion vol­umes. These strate­gies are there­fore not com­pat­i­ble with respect for plan­e­tary lim­its. We need to focus on strong cir­cu­lar­i­ty, based on the prin­ci­ples of sobri­ety and extend­ing the life of prod­ucts and infra­struc­tures. For exam­ple, an elec­tric drill is used for an aver­age of 12 min­utes over its life­time!4And who does­n’t have a raclette machine in their kitchen that they only use a few times a year? The chal­lenge of strong cir­cu­lar­i­ty is not to reduce the pro­duc­tion of wealth, but to gen­er­ate it dif­fer­ent­ly. It is based on two pil­lars: extend­ing the dura­bil­i­ty of prod­ucts and inten­si­fy­ing their uses, par­tic­u­lar­ly through eco-design.

Have companies already made this change on a large scale?

A good exam­ple is Fnac-Dar­ty, which has a third of the mar­ket for elec­tri­cal and elec­tron­ic prod­ucts in France. With their long-stand­ing cus­tomer ser­vice and a net­work of over 2,500 repair­ers that they train them­selves, they are able to inter­vene quick­ly any­where in the coun­try with a high lev­el of ser­vice. Tak­ing advan­tage of the intro­duc­tion of the repara­bil­i­ty index in the Anti-Waste for a Cir­cu­lar Econ­o­my law (AGEC law), the com­pa­ny launched repair sub­scrip­tion pack­ages for all its prod­ucts (Dar­ty Max). After only one year, they had sold 500,000 of them. The com­pa­ny’s goal is to sell 2 mil­lion sub­scrip­tions by 2025. At the same time, they are seek­ing to guide con­sumer choice and sup­pli­er offer­ings by estab­lish­ing a list of the most sus­tain­able prod­ucts, and to nar­row down the offer­ing to the most sus­tain­able prod­ucts. In this way, they intend to grad­u­al­ly shift their busi­ness mod­el from the sale of prod­ucts (which is cur­rent­ly very com­pet­i­tive with plat­forms such as Ama­zon) to the sale of ser­vices, to build cus­tomer loyalty.

The “econ­o­my of func­tion­al­i­ty”, which con­sists of sell­ing a per­for­mance of use rather than the prod­uct itself, is anoth­er promis­ing mod­el, exper­i­ment­ed with by a grow­ing num­ber of com­pa­nies. To devel­op this mod­el of ser­vices with less envi­ron­men­tal impact, it is nec­es­sary both to have eco-designed prod­ucts so that they can be eas­i­ly main­tained, repaired, and recy­cled and to set up net­works of tech­ni­cians in the regions to pro­vide these ser­vices to cus­tomers. A his­tor­i­cal case is Miche­lin, which has devel­oped the Tyres-as-a-ser­vice offer, which is pro­posed to pro­fes­sion­al cus­tomers (HGV and bus fleets, etc.) and which cov­ers tyre main­te­nance, repair (re-tread­ing and regroov­ing) and end-of-life recycling.

Do the public authorities support this approach? 

The prob­lem is that pub­lic author­i­ties pro­duce con­tra­dic­to­ry injunc­tions. On the one hand, they pro­mote the cir­cu­lar econ­o­my and a cer­tain form of sobri­ety (e.g. AGEC law), but, at the same time, they encour­age the pro­mo­tion of “green” growth tech­nolo­gies (elec­tric vehi­cles, off­shore wind tur­bines, mini nuclear pow­er plants, “green” hydro­gen, etc.) which nev­er­the­less have a high mate­r­i­al foot­print and thus gen­er­ate pol­lu­tion trans­fers (e.g. France 2030 plan). In the “green” growth approach, the implic­it assump­tion is that the growth in pro­duc­tion and con­sump­tion can be con­tin­ued indef­i­nite­ly since “clean” tech­no­log­i­cal solu­tions will have been devel­oped. How­ev­er, a choice must be made between encour­ag­ing high-tech tech­no­log­i­cal solu­tions or ini­ti­at­ing a strong cir­cu­lar tran­si­tion, based on sobri­ety and the devel­op­ment of eco-designed tech­nolo­gies, pos­si­bly low-tech.

Interview by Marina Julienne
4Source Ademe, la face cachée des objets : https://​librairie​.ademe​.fr/​d​e​c​h​e​t​s​-​e​c​o​n​o​m​i​e​-​c​i​r​c​u​l​a​i​r​e​/​1​1​8​9​-​m​o​d​e​l​i​s​a​t​i​o​n​-​e​t​-​e​v​a​l​u​a​t​i​o​n​-​d​e​s​-​i​m​p​a​c​t​s​-​e​n​v​i​r​o​n​n​e​m​e​n​t​a​u​x​-​d​e​-​p​r​o​d​u​i​t​s​-​d​e​-​c​o​n​s​o​m​m​a​t​i​o​n​-​e​t​-​b​i​e​n​s​-​d​-​e​q​u​i​p​e​m​e​n​t​.html

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