Transitioning To A Circular Economy

circular economy

The hallmark of the predominating economic model since the industrial revolution has been “take-make-dispose”. This has been the standard approach to production and consumption for decades. This linear structure has not only proven to be unsustainable but also extremely wasteful, much to the detriment of our planet. With the current fight against climate change and environmental degradation, the reality of the negative impact of a linear economy has become more apparent. In this article, we take a look at the newer and more circular economic model based on the principle of “reduce-reuse-recycle.”

The shortcomings of linear economic models.

circular economy

The classic model of a linear economy involves resource extraction, product creation, and waste disposal after usage. As a result of the way things are run, value is created by making and selling as many products as possible. As a result, resources are used in an irrational manner. This system is wasteful in addition to being inefficient. The linear economic structure’s focus on individual products presents another difficulty. The product is the center of attention, and its possible environmental impacts throughout development and production are completely ignored. This economic strategy primarily prioritizes increasing output and consumption.

The linear economy has a harmful impact on the environment in two ways. First, through the extraction and processing of these resources by mining, drilling, and a variety of other operations that result in massive amounts of CO2 emissions. Then there’s the pollution generated by the end products. Most disposal methods end up causing more harm than good, not only to the environment and biodiversity but also to humans. According to Bloomberg, researchers have discovered microplastics in the human bloodstream, with potential health consequences that have yet to be thoroughly assessed. This is only one example of how hazardous waste disposal has been implemented.

The circular economy model, which was first proposed in the 1960s, has been shown to be much more effective and sustainable. A circular economy’s primary goal is to preserve resources and minimize waste, based on the reduce-reuse-recycle principle. The World Economic Forum defines the circular economy concept as  

“A circular economy is an industrial system that is restorative or regenerative by intention and design. It replaces the end-of-life concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse and return to the biosphere, and aims for the elimination of waste through the superior design of materials, products, systems, and business models. ”

In direct contrast to a linear economy, the primary goal of this economic model is to maximize the value of existing resources while minimizing waste as much as feasible. Products are designed with the goal of becoming resources rather than waste. A circular product is one in which the resources used to create it may be recycled and reused. The same product can be reused rather than discarded. This results in less pollution and a more sustainable use of resources.

The circular economy is built on the principles of reducing waste and pollution, while also ensuring that products and raw materials can be utilized and repurposed. It is an economic model that is distributive, accountable, and inclusive. The circular economy model has been linked to the provisions of the Sustainable Development Goals of the United Nations and has been adopted as the best way forward in several international organizations.

Most ecologists and environmentalists agree that economic circularity is the economic paradigm of the twenty-first century. The fundamental issue with a circular economy has been implementation, despite its environmental benefits and the viability of a truly sustainable economic model. Nonetheless, governments and institutions have gradually begun to adopt circular ideas.


Blockchains’ potential role in transitioning to a circular economy.

Blockchain technology is an excellent tool for creating a genuinely circular economy. As previously stated, the cycling of products into resources and back into new products is the foundation of a circular economy. Blockchain technology can help with this process by detecting and tracking materials and resources throughout supply chain integrations, allowing them to be remanufactured or, when that is not possible, recycled into new goods. Several firms have taken the initiative and are actively leading the way by implementing circularity into their business models with the help of blockchain technology. Suez, a waste management company, uses a blockchain network called CircularChain to document the process of repurposing sewage sludge as agricultural soil. 


Blockchain integration also gives a platform for manufacturers to source materials, record them, and remanufacture them, allowing businesses to reduce their reliance on newer resources. Coca-Cola is a real-world example of this use case. Using the BanQu blockchain to record and reward the activities of informal garbage collectors in Africa. This enables the tracking and tracing of recycled materials throughout the supply chain. Another example is Electorlux’s collaboration with Covestro to improve the recycling of rigid PU foams. Circularise, a blockchain platform, is being utilized to do this. 

There are other examples of blockchain having a substantial impact on the circular economy, bringing ideas and inventions to fruition that would have been regarded as unfeasible just a few decades ago. Even more so, blockchain is still in its infancy and, as such, has a considerably greater ceiling for integration and future usage.