Designing the circular economy – a case for applied science

Probably the most common visual of the circular economy is an infographic produced years ago by the Ellen Macarthur Foundation [1]. It shows closed streams of materials, green for organic matter, blue for technical materials. Biologically-based materials (organic matter) returns to form a source of new organic matter through composting and anaerobic digestion. Recovery of technical materials applies strategies such as reuse, reparation, remanufacturing and recycling.

As famous as that picture has become – and I use it myself in lectures on a regular basis – one must understand that it hides rather than explicates the complexities of circularity. For one thing, there are more than just the carbon cycle in nature that are important to consider – hydrogen and nitrogen deserve equal attention. Technical materials, for another, are subject to various influences that impede recovery strategies – from aging to their very composition.

Take the example of plastic. Plastics come in various formulations, from PVC to PP to PPE to ABS and many more. Yet beyond their core ingredients that give them their name, plastics contain various other substances, called additives, that are used to modify the behaviour of the core component in manufacturing and use. While most of the characteristics of these additives are known, for instance being carcinogenic, it is a well-kept secret how much of these additives form part of any particular plastic. Furthermore, they are presumed to accumulate during recycling which is a rather unhealthy prospect.

But the intricacies of circularity are just one aspect the circular economy infographic is hiding. The other aspect, and that is maybe more grave an omission, is the economy. The diagram tells us nothing at all about the economy. No word about value creation, value delivery, or value retention. No mention of money, no mention of ownership, no mention of labour, no mention of profit.

To be fair, in their learning hub the Ellen Macarthur foundation furnishes a whole set of workshop materials dedicated to the concept of the Doughnut Economy as promoted by Kate Raworth [2]. One of the principles Raworth proposes is the call for companies to “be generous”, to produce more energy and raw materials than they consume. This is quite counterintuitive to profit-maximising strategies of behaving sustainably as long as it pays.

Another element in Raworth’s approach is the understanding that companies are embedded in a system of state, households and commons. The state provides infrastructures, households care for future labour, and the commons contributes almost invisibly so many valuable goods and services to the economy.

A commons is a collectively owned and regulated property with formal and informal institutional mechanisms in place to manage or govern who can access and use it and who is supposed to contribute in which way. It is a social system for the long-term stewardship of resources that preserves shared values and community identity. Historically, as illustrated by Elinor Ostrom, commons have proven successful to use and protect natural resources such as fisheries, woods and alpine irrigation systems. [3]

A commons approach is radically different to what contemporary market approaches such as servitization propose. Servitization tries to solve the sustainability problem by keeping ownership of materials in one hand, the firm, which then rents the products made from these materials to the users. Rolls-Royce pioneered this idea with jet turbines, and the idea has been adopted in investment and consumer goods. Currently, cities are awash with electrical scooters, bikes and cars for short-term hire pretending to provide mobility rather than vehicles. While abundance is often seen as a sustainability principle, this particular abundance of electrical batteries is rather a sign of venture capitalist gambling than of a circular economy.

Raworth, again, argues that 21st century companies that aim to follow a circular, doughnut economy paradigm, are not well served by 20th century finance, but would require 21st century finance, too. She advocates to redesign the economy, all aspects of it, in a circular, regenerative and distributive way. This redesign is a complex task that requires a collective effort of scientists, engineers, economists, legal and business people, of social innovators and community builders. It is required to rely on sound theories, and it has to be grounded in current practice – a case for applied science and design.

[1] https://www.ellenmacarthurfoundation.org/circular-economy/concept/infographic
[2] Raworth, K., 2017. Doughnut economics: seven ways to think like a 21st-century economist. Chelsea Green Publishing.
[3] Ostrom, E., 1990. Governing the Commons. The Evolution of Institutions for Collective Action. Cambridge University Press, Cambridge.

This blog first appeared on 7 February 2020 on the site of the Resarch Centre Sustainable PortCity at Rotterdam University os Applied Sciences.