No-waste circular economy is good business – ask China
Don't throw out that broken toaster: it's key to our prosperity. Redesigning the economy so that all waste is reused or recycled would be good for business, according to two new reports.
For centuries the global economy has been linear. Companies extract resources from the environment, turn them into products and sell them to consumers – who eventually throw them out. As a result we are burning through Earth's natural resources and wasting useful materials.
But it doesn't have to be that way, says Felix Preston of think tank Chatham House in London. Instead, we could have a circular economy in which waste from one product is used in another.
In "A Global Redesign: Shaping the circular economy", Preston argues that reusing resources makes good business sense now that resource prices are high and volatile. He cites a January report by consultants McKinsey & Company which tries to put a value on the circular economy.
"Towards the Circular Economy: Economic and business rationale for an accelerated transition" estimates the circular economy could save the European Union $340 to $630 billion per year in materials costs, about 3 per cent of the EU's GDP.
"The opportunity is enormous," Preston says. "The challenge is how to unlock it."
However, a company wishing to go circular will face considerable upfront costs, and companies that have invested heavily in the existing system will be reluctant to change. Nevertheless some are pushing forward: for instance Renault's Eco2 cars are designed so that 95 per cent of their mass can be recovered and reused.
China is already pushing the circular economy. According to its 12th five-year plan – covering 2011-15 – China will "plan, construct and renovate various kinds of industrial parks according to the requirements of the circular economy".