Circular economy: the most important components and the most difficult challenges

The circular economy...the most important components and the most difficult challenges

The contemporary global economic system relies - mainly - in its various industrial and service sectors on a series of processes, called the linear economy. By this phrase, we mean the process of extracting virgin raw materials from their original places, then transporting them for use as basic inputs in many manufacturing processes.

Using technology, these raw materials are passed through a variety of processes, until they are ultimately transformed into a product that meets the needs of different segments of consumers. These products are then consumed during their life cycle until they are replaced by new ones, or even replaced once another product appears on the market with better features.

Consumed or old products often find their way to landfills, or are even burned, which causes a lot of negative damage to the environment, not only through the release of pollutants, but also because of the need to extract new virgin raw materials, and repeat the process.

This model of the economy - the linear economy - leads to various problems, such as the depletion of primary resources, in addition to increasing the burden on many environmental systems, whether during the processes of extracting raw materials, or during the processes of transporting and processing them, until they find their stability in the hands of the final consumer.

In the midst of this global interest in the issue of climate change, and the emergence of the term sustainable development; The world found itself besieged by this linear system, which meets the needs of development on the one hand, but on the other hand destroys the concept of sustainability, which has drawn attention to our need to shift away from this type of economy, if we want to achieve the goals of sustainable development.

The question remains: How can we create an economic system that achieves the increasing growth requirements, while enabling us to achieve the goals of sustainable development and preserve the environment? Here was the answer: circular economy.

The main idea behind the circular economy “CE” is to transform the linear economy into a cycle, where the waste we produce is used again in production processes, as an alternative input for virgin raw materials, thereby achieving our development aspirations, and preserving the environment and its resources at the same time. Which means contributing - directly - to our efforts to reduce climate change.

The above has made the concept of the circular economy popular in academic, as well as investment, circles. In the special file for the December issue of Earth Guards magazine, we will shed light in some detail on what the circular economy is, how can we integrate it into our contemporary world, and what are the desired goals of relying on it?

History of the circular economy

The term circular economy appeared - according to the Egyptian Center for Strategic Thought and Studies - more than 3 decades ago, specifically in the year 1989, and this was with the launch of the book “The Economics of Natural Resources and the Environment”, issued by Johns Hopkins University Press in America, by its authors: “Kerry Termes” and “David Pierce and R.”

The book explained the relationship between the economy, natural resources, and environmental systems, and the nature of integration between the economic and environmental systems. The book also reviewed the linear economy, the most important defects of this economic system, and why we should shift from it.

But, what about before 1989? We can say: The circular economy was already present before this date, whether in the corridors of universities or in factory yards, but under other names, most notably recycling. It is even possible to trace the circular economy until the Bronze Age, when bronze was recycled and used again.

The circular economy may be a contemporary term, but circular practices have long been part of human history. In this regard, we can consider the Bronze Age to be the first practical example of a circular economy, as bronze was the main material in this era, and its recycling was the focus of the economy at that time.

When we realize the above, we will begin to correct our understanding of the circular economy, as an emerging approach. The truth is that circularity was a foundation and an integral part of human history, while the linear economy is strange and new.

Drivers of the circular economy

The transition to a circular economy will not happen simply because it is better for our planet, but rather requires a set of engines that work to move it forward. To ensure its real adoption, whether by society, companies or individuals; Based on this, we can divide these circular economy engines into three sections, each of which includes a set of basic elements.

1- Community Engines

The essence of the circular economy is to reduce the demand for resources; Therefore, at the societal level, we must focus on demonstrating the benefits that the circular system can achieve in terms of impact on different environmental systems, which are four main benefits:

First - Efficiency of resource consumption: The increasing demand for resources - especially non-renewable ones - leads to their decrease over time, and here the circular economy comes with solutions that reduce the demand for various materials, while continuing to meet the requirements of growth.

Second - Reducing emissions: Perhaps some Earth Guards readers will be surprised to learn that about 50% of global carbon dioxide emissions can be attributed to the production of various materials; Therefore, emissions can be reduced sharply and climate change can be tackled by reducing demand for virgin materials.

Third - Feed Efficiency: Linear thinking in food production systems leads to the degradation of agricultural lands, and the pollution of oceans and lakes with huge quantities of waste from these systems. Here, circular agriculture addresses this problem by reusing the waste resulting from agricultural operations and production processes. Food.

Fourth - The health of biodiversity: Reducing the extraction of raw materials leads to a decrease in demand for land, which is - certainly - a good thing for biodiversity, which is constantly suffering from demolition and distortion of its ecosystems.

2- Corporate Engines

From an investment perspective, companies look at the circular economy - and other systems - in terms of gain and loss. Without economic feasibility to adopt the circular economy, companies will refrain from making any effort or money to transform their industrial and service activities. Below are three drivers that may push companies to adopt the circular economy:

First - The shift in customer thinking: The growing awareness of a broad segment of consumers about climate and sustainability issues has created an increasing demand for green goods in various markets. Which means that product sustainability has become a factor that determines the purchasing decision of a growing sector of people.

Second - Long-Term Revenues: The many circular business models require radical change in any organization that wishes to adopt them. This is a process that can be expensive at first, but it leads to economic benefits in the long term. Independence from fossil fuels, reducing reliance on virgin materials, and maximizing recycling will eventually pay off.

Third - Compliance with legislation:Given the capitalist nature that dominates companies, local governments impose legislation that obliges these companies to reduce their environmental footprint and switch to sustainable alternatives; Therefore, adopting the circular economy from now will ensure that companies are prepared for various future legislation, and will reduce the costs of sudden transformation.

3- Personnel Engines

Some may think that the basic benefits of the circular economy are limited to preserving the environment, or improving corporate wealth management, but the matter extends to individuals; At the individual level, the circular economy can contribute to improving a number of important things, including:

First - Creating job opportunities:The process of recycling and using materials again requires many new facilities and more developed production lines. Which means creating more job opportunities; Thus reducing unemployment and reducing poverty.

Second - Health: Human health suffers in developing countries, as a result of poor management of waste and toxins resulting from various activities. Therefore, improving waste treatment and increasing recycling will reduce the spread of diseases and improve water and air quality at the local level.

Third - Sharing the environmental bill: In a circular society, consumers are not alone in bearing the bill for purchasing different products and replacing them from time to time, but responsibility is also placed on the The supply chain is fully responsible; From manufacturer to retailer.

Practices for transitioning to a circular economy

The previous engines will have a major role in transforming society to believe in circularity. In what follows, we will try to shed light on a group of important practices that we must implement in reality if we want to transition to a circular economy. We can divide these practices into three main axes: The first of these is legislative practices, the second is corporate practices, and the last is life practices.

1- Circular Legislation

Legislative practices are considered particularly important to push any society to transition to a circular economy. Without these regulating legislation, there will be no real tool that enables - or obligates - companies and individuals to do what is necessary to transition to a circular economy. The role of circular legislation can be summarized as follows:

First - Setting standards and standards:All institutions - without exception - need standards and standards through which they can evaluate the extent of progress in their application of the concept of the circular economy. Communities and governments also need these standards and standards; In order to impose what is necessary on companies.

Second - Updating current laws:There is no doubt that there are many laws and regulations that make the transition to circular solutions difficult for many companies at the present time; Therefore, the legislator must take into account updating these laws to keep pace with the changes of the times. To achieve the desired goals.

Third - Creating economic incentives for companies: Currently, many local legislations lack articles that stipulate the existence of economic incentives for companies that truly adopt the circular economy. Given that the cost of a circular economy is initially more compared to a linear economy; Economic incentives will play an important role in encouraging companies to transform.

Fourth - Raising consumer awareness: Individuals - as well as companies - lack the information and incentives necessary to shift to sustainability and circularity, but when awareness is raised and guidance models are provided that pave the way for everyone, there is A state of transparency that creates an encouraging climate for the transition to a circular economy.

2- Corporate Practices

Capitalists must realize that sustainability is inevitably coming to them, whether through consumer pressure or pressure from local and global legislation. Therefore, decision-makers in various companies must adopt the following practices:

First - Investing in knowledge: Before any organization begins implementing new business models, it is initially important to understand the opportunities and challenges facing the sector in which it operates, and to verify the possibility of providing the necessary resources to shift to the economic model. The circular.

Second - Openness to revolutionary innovations: To achieve success using circular business models, radical organizational change in the company may sometimes be crucial; Therefore, decision makers in companies must have an open mind to new and revolutionary solutions, and try to understand the extent of their impact on their activities.

Third - Cooperation with other companies: To ensure the continuation of circular material flows - safely and of high quality - there is a need for transparency along the supply chains; That's why collaboration and trust are often referred to as crucial elements of a circular economy.

Fourth - Preparing for digital transformation: The digital transformation of the circular economy will make this business model more sustainable and inclusive, by improving the flow of resources, enabling consumers to make the right decisions, and helping companies To implement transformation strategies more effectively.

3- Life practices

For individuals, the circular economy has the potential to make life easier, while being more environmentally friendly. But how can we participate - at the individual level - in implementing the circular economy? We summarize this in the following points:

First - Responsible Consumption:The most effective way to reduce the demand on resources is - simply - not to consume or reduce it to minimum levels; So, before making a purchasing decision, you should ask this question: Do I need or want this thing? If there is nothing you need, it may be better to postpone the purchase decision a little.

Second - Reuse:Here we mean the broader concept of reuse, which includes purchasing used items, which may be complicated sometimes, but if the opportunity arises to satisfy a need by purchasing User, do this without hesitation.

Third - Increasing awareness:The issue of the transition to sustainability in general, and the circular economy in particular; It is essentially an issue of awareness, especially at the individual level. By shaping the awareness of the individual - the consumer - his decisions will encourage the transition to sustainability.

Fourth - Circular voting: The transition to a circular economy requires providing the necessary investments in the right places. Politicians certainly have an important role to play in directing this money in the right direction, which puts the responsibility on individuals to choose members of parliaments who understand and embrace the circular economy.

Challenges of transitioning to a circular economy

Most of the time, the transition to sustainability and adopting a circular economy seems self-evident, which prompts many companies and institutions to announce strategies for sustainable transformation, but the missing link here is - in most cases - not studying the reality of the impact of these strategies, whether positive or negative, but rather it is sufficient to adopt green practices; From here arose a set of challenges facing the circular economy, which we will discuss in the following lines.

The most prominent challenges facing the application of the circular economy lie in the reverse effect, which occurs when a manufacturing or service process is converted to circularity, not for the sake of circularity, but rather for purely economic considerations, which means rationalizing expenditures - also - along the supply chain, and exploiting the surplus of this money in other projects that may not necessarily be sustainable, so the result is a conflicting effect, and perhaps a more negative one than Previous.

Another challenge is postponing negative impacts. By this we mean that when assessing the environmental impact of an activity, it is, of course, very difficult to take into account and reduce all the resulting impacts. Therefore, we are forced to deal with some effects within a regulatory framework that allows them, but within certain limits, which is something that may not carry any threats in the short term, but in the long term the possibilities remain open.

Unexamined solutions also represent one of the difficult challenges on the path to the transition towards a circular economy. Under legislative and societal pressures, a sector may shift to a new method of manufacturing or service provision that is, in fact, less harmful than its predecessor, but at the same time it still carries significant harm to the environment. For example: Many countries around the world have switched from coal to natural gas, which is - certainly - a good step, but at the same time they have switched from one fossil source to another fossil source.

In addition to the above, many of today's manufacturing and service delivery systems are the product of decades of development and experience; Which means that they are systems that operate with high efficiency, and that switching from them to new systems - more sustainable and still in the process of development and improvement - is a risk that many people are reluctant to take.

Circular Economy and Sustainable Development

Some may think at first glance that the only purpose of the process of transitioning to a circular economy is to conserve resources and preserve the environment, but the matter goes beyond this to many other purposes, which directly affect the achievement of Sustainable Development Goals (SDGs).

Research shows a close link between the circular economy and many of the Sustainable Development Goals (SDGs), including SDG 6 (Clean Water and Sanitation), SDG 7 (Affordable and Clean Energy), SDG 8 (Decent Work and Economic Growth), SDG 12 (Responsible Production and Consumption), and SDG 15 (Life on Land).

In addition to the above, the circular economy can be linked to a number of other goals that are more relevant to society, such as Goal No. (1) of the Sustainable Development Goals (SDGs) “Eradicate Poverty,” Goal No. (2) “End Hunger,” Goal No. (3) “Good Health and Well-Being,” and Goal No. (17) “Establish Partnerships to Achieve the Goals.”

In the following points, we discuss the direct impact of the circular economy on achieving some of the Sustainable Development Goals (SDGs) previously mentioned: This is to reach a more comprehensive understanding of the role expected from adopting circular thought.

First - Circularity and the eradication of poverty: Given the agricultural methods we currently follow, there is a set of circular principles that can be applied in all parts of the food value chain, and can help enhance soil conservation and increase the resilience of different agricultural systems. Examples of these principles include: the use of biochar, biogas, and natural fertilizer produced from organic waste, in addition to circular agriculture, which is a concept that can make a great contribution to the eradication of poverty.

Second-Clean water and hygiene: The circular economy can help achieve universal and equitable access to safe and affordable drinking water services, through the development of technologies and systems, such as: small-scale water purification technologies, water desalination, and wastewater treatment To reduce its discharge into drinking water streams.

Third -Clean and affordable energy: Efforts to address climate change have focused on the transition to renewable energy sources, which is certainly crucial. Because it is consistent with the circular economy. However, despite this, switching to renewable energy sources will reduce about 55% of emissions, with the remaining percentage coming from production processes in sectors such as cars, clothing, food, and others. Here comes the role of the circular economy, which will have the ability to transform these production processes. To be more efficient and less resource demanding.

Fourth - Decent work and economic growth: The linear economic system is a system that consumes resources and is a large producer of waste, but in the circular economy, production processes are thought about differently, so that products can be used at the end of their life cycle through redesign, reuse, recycling, etc. All of these operations require more manpower, which will have a double-impact role. On the one hand, it will provide adequate income for their families, and on the other hand, it will contribute to preserving the environment and growing local economies.

Fifth - Responsible production and consumption: Many circular practices are of great importance for achieving this goal of sustainable development; Water management - for example - smart waste management, reliance on renewable energy, smart design, and sustainable supply chains; Practices that can reduce industrial pollution of water and soil.

Sixth - Life on land: Circular economy practices - such as circular agriculture, agricultural waste management, agricultural soil restoration, and forest planting - all serve the interest of enhancing various ecosystems and preserving biological diversity on land, and they also have a direct impact in combating climate change; Thus preserving this diversity beyond life on land.

Seventh - Establishing partnerships to achieve goals: The shift to a circular economy requires a systematic and radical change in many systems, regulations, and legislation, which, by its nature, requires cooperation on a large scale. Local governments alone will not be able to achieve this, nor will we be able to achieve the desired global goals without cooperation at all levels. Which means that the circular economy will represent a new cycle of cooperation, whether at the local or international level.

Circular Economy and the Fourth Industrial Revolution

In recent decades, the circular economy has become increasingly viewed as the preferred manufacturing model for achieving sustainable development, but despite this, there are still many technological, financial, regulatory, social and cultural barriers that hinder the transition from linear production systems to circular production systems.

To overcome the above, there is almost general agreement that advanced digital technologies, collectively known as the Fourth Industrial Revolution, work as catalysts to enable the circular economy to remove many of the aforementioned obstacles. The technologies of the Fourth Industrial Revolution also work to bridge the information and knowledge deficit resulting from these obstacles.

To clarify the above, for example, when dealing with a certain type of waste to integrate it into the circular economy, the lack of information about this waste - such as places of generation, quantities generated, and physical and chemical properties - represents a bottleneck in converting this type of waste into a raw material again, and here comes the role of Fourth Industrial Revolution technologies, which can enable many new business models.

The Fourth Industrial Revolution is also characterized by the convergence and integration between a number of emerging technical fields, such as nanotechnology, biotechnology, and advanced digital production (ADP) technologies. All of them are essential technologies for the transition to a circular economy.

The Fourth Industrial Revolution also depends on collecting and analyzing data, and learning from it to a large extent, using artificial intelligence technology and big data, which contributes to enhancing a group of other technologies such as remote sensing and monitoring smart production processes. Thus giving the human worker the ability to interact instantaneously with production processes. To work on improving it and increasing its efficiency.

Advanced digital production technologies allow the digitization of information and its integration into value chains. It also allows the digitization of the processes of supplying products and services and the development of revolutionary business models, which in turn will lead to improving consumer interaction with products and services, and facilitating the process of accessing them through the exchange of information. Which means more revenues, part of which can be pumped into building various circular economy strategies.

Disadvantages of the circular economy

As usual when discussing the special file, we try to highlight the negative aspects that are usually forgotten, especially when it comes to green technology or a sustainable strategy, where the great benefits are widely emphasized; Which prevents us from getting a clear view of all aspects. In the following lines, we will discuss some of the disadvantages of the circular economy.

First-Complexity of implementation: The transition from a linear economy to a circular economy is not without challenges, the most important of which is the complexity of implementing circular practices. Due to the associated costs and the need to reshape supply chains, as well as modify product design in accordance with circular principles. All of the above requires huge investments and advanced technology.

Second - Limited scope: Circular economy strategies currently operate on a limited scale, as application - on a large scale - faces a group of different obstacles, represented by out-of-date regulatory frameworks that do not embrace the circular economy; Which makes some companies unable to balance different legislation and laws. In addition, the expansion of the circular economy depends on the presence of a continuing growing demand for circular products and services in the market.

Third - Technological and design constraints: Some products and materials have technical challenges to circular solutions; Complex electronic products, for example, may contain components that are difficult to recycle or renew, and composite materials used in some industries may present challenges in terms of separation and recycling.

Fourth - Lack of availability: While the concept of the circular economy is gaining momentum in recent years, we find that the availability of circular products and services is still limited, which can pose a challenge for consumers and companies. Even when the circular economy is sincerely adopted, the lack of availability of circular options will lead to greater effort to find Solutions.

Fifth - Relying on the consumer’s mentality: The transition to a circular economy requires a shift in the consumer’s mentality and behavior, to move from a culture of waste disposal towards a culture of repair, reuse and recycling. Educating and engaging consumers to adopt circular practices, make sustainable choices, and support circular businesses is crucial to the success of a circular economy, but some ingrained consumer habits and preferences stand in the way of a circular economy.

By adopting circular practices - such as conserving resources, preserving the environment, and providing economic opportunities - we can address the pressing issues of resource scarcity and waste generation. However, the complexity of implementation, the limited availability of circular solutions, barriers to scale, various technological constraints, and the need for a shift in consumer behavior - all constitute flaws in the circular economy system, and require concerted efforts to overcome them.

The above can be summarized in that even if various institutions adopted the circular economy - in a real and honest way - this alone is not enough to achieve it; Given that the circular economy depends on a group of variables whose outcomes are difficult to control or predict.

Conclusion of the special file

The climate challenges we are witnessing in our contemporary world are reason enough for us to give great attention to every idea or approach aimed at confronting these challenges. Perhaps the circular economy, with its comprehensive approach aimed at supporting development and ensuring sustainability, is the reason for the strong momentum and general acceptance of this economic model. In the December issue of Earth Guards magazine, we tried to shed light on various aspects related to the circular economy.

When pushing towards institutions adopting the circular economy, we must be aware of its shortcomings and the challenges it faces, so that expectations are logical, as well as regulatory obligations on companies and individuals. Otherwise, the concept of the circular economy will turn into a title for companies’ advertising campaigns, or into a set of regulations that are circumvented.

In general, the economic and social dimensions must be combined with the environmental dimension. To highlight the feasibility of transitioning to a circular economy, and this is a desire to achieve the short- and long-term goals of this promising economic model, while working to spread awareness, whether at the corporate or individual level. To facilitate the transformation process, and create a new market that drives demand for circular products and services.

From this standpoint, we must be aware that adopting a circular economy is not a magic solution to our climate problems, as this adoption must have achievements on the ground, while integrating it with other climate solutions within the framework of a comprehensive strategy that achieves the desired goals. To ensure sustainable growth.

In this regard, we do not forget to point out Egypt as one of the first countries in which the circular economy appeared, and this was in the form of dozens of facilities that came to light in the sixties of the last century, to work in the field of recycling. Now there are more than 6,000 establishments operating in this promising sector, which receives special attention from the state.

For a developing country like Egypt that has a huge population, the huge amounts of waste that are generated represent a rich and important source for supporting the national circular economy and achieving a number of other social goals, such as: providing job opportunities and improving the income level among many families.

The bottom line is that the circular economy represents a way to preserve the resources of our ecosystems for future generations, in addition to being a promising model of consumption and production models that takes care of recycling and use, with the aim of delaying the resort to extracting virgin raw materials and manufacturing new products.

From the above, we conclude that the circular economy will clearly contribute to achieving the goals of the national agenda, “Egypt Vision 2030,” by creating a positive climate that preserves the environment and achieves sustainable development, which will ensure that Egypt maintains its position as a unique development model in Africa and the Middle East.

In conclusion, we emphasize the centrality of spreading awareness and its importance in adopting the circular economy, a role in which the Earth’s protectors make great efforts. To correct concepts, and shift society’s collective behavior towards sustainability, in an effort to preserve and protect the earth, and ensure a just future for future generations.