The world is changing, and organizations need to adapt in order to compete and thrive. Businesses and governments in Ontario (and globally) are facing issues such as:
- Increasing price volatility and costs for virgin materials, energy and waste disposal.
- Disruptive technologies and business models such as 3D printing, renewable energy, mobile communications and the sharing economy.
- Increasingly stringent environmental expectations from regulators, investors and stakeholders in order to address climate change and other challenges.
The circular economy has emerged as a strategy to address these types of issues, manage risk and build stronger, more resilient and more competitive businesses and economies.
What is it?
A circular economy aims to maximize value and eliminate waste by improving the design of materials, products, systems and business models. Circular economy strategies encourage:
- The design of long lasting, reusable and easily recyclable products
- Decreasing the use of virgin (raw) materials and non-renewable resources and increasing the use of renewable resources and recycled materials
- Shifting from “waste management” to “resource recovery” where everything has a value and zero waste goes to landfill
- Shifting from linear supply chains that produce disposable products to circular supply chains that produce ongoing services (Product-as-service)
- Dramatically reducing the negative environmental aspects of economic development (such as pollution) through carbon-neutrality, using non-toxic-materials and other strategies
From Linear to Circular
In the conventional economy, materials move through a linear process of extraction, production, consumption and eventual disposal (“take-make-waste”). This model is problematic as it is inherently inefficient, wastes valuable resources and poses significant risks to both human and environmental health.
In contrast, circular economies eliminate waste through the redesign, reuse and recycling of products and materials in interconnected systems, biological cycles and markets (“make-use-return”). Well-known circular economy approaches include the Cradle-to-Cradle® design philosophy and the Zero Waste movement. Learn more.
The competitiveness imperative
In 2008 global crude oil prices peaked at $147/barrel, resulting in huge cost increases for businesses, governments and consumers. For example, the costs of shipping from Shanghai to the interior of North America went from $3,000 to more than $8,000 per container.
In the face of this spike in fossil fuel commodity prices – the equivalent of a carbon tax of $300/tonne of CO2 emissions – the global economy began a remarkable transformation.
This transformation took the form of dramatic increases in energy efficiency measures in domestic manufacturing, the repatriation of manufacturing from Asia (as increased shipping costs eclipsed lower Asian labour costs) and resource efficiency measures (as the cost of energy-intensive materials increased). It also spurred major innovation in renewable energy, resulting in a 95% decrease in the cost of solar energy since 2008.
Since 2008, oil prices have dropped dramatically but the business imperative for the circular economy is stronger than ever. Climate change and other environmental challenges are driving businesses to reduce pollution and waste, increase efficiency and become carbon-neutral.
A multi-billion dollar opportunity
The transition to a low-carbon, circular economy will deliver significant economic, social and environmental benefits. Globally, Accenture Strategy predicts a $US4.5 trillion reward for circular economy businesses models by 2030.
In Ontario, this transition presents a multi-billion dollar opportunity. For example, Ontario’s waste sector currently sends >9 million tonnes of waste to landfill each year and generates megatonnes of greenhouse gas emissions. Moving to a more circular economy, where Ontario increasingly reuses and recycles the resources it already has, could support close to 13,000 new jobs, boost Ontario’s GDP by $1.5 billion and provide significant environmental benefits such as reducing air, soil and water pollution.
The need for collaboration
The work has already started. Many businesses have already adopted circular economy approaches and reaped the benefits. Provincially, the 2016 Waste Free Ontario Act and Strategy for a Waste-Free Ontario: Building the Circular Economy lay the foundation for a radical transformation of waste production and management in the province.
Businesses and governments can only capture these opportunities by working together. By bringing together leaders from the private, public and not-for-profit sectors, CEIL will catalyze the development of innovative circular economy solutions, such as new processes, products, policies and partnerships.