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What is The Circular Economy?

Video Provided by the Ellen MacArthur Foundation

In short, the circular economy is a new way to look at manufacturing that considers the complete life cycle of a product from the raw materials used to how remanufacturers and consumers can later recycle that product.

And it couldn’t have come at a better time.

According to a study conducted by the Sustainable Europe Research Institute, “humans today extract and use around 50% more natural resources than only 30 years ago, at about 60 billion tons of raw materials a year.” Cartridge Evolution is already working to positively affect the environment by saving three pounds of natural resources and 3.5 ounces of oil per cartridge recycled. However, the need for remanufacturers across all industries is essential to sustaining life for years to come.

Linear Vs. Circular Economy

what is the circular economy

In a Linear Economy, new resources are used to create products that are later disposed of and never used again. Most businesses operate on a Linear Economy system while emphasizing business revenue and customer value. However, this way of working greatly impacts resources that will be available to future consumers, uses excessive power to produce new products, and ultimately increases product costs for the companies, as well as their consumers.

The circular economy serves as a real remedy for these problems. This is because a circular economy is a system that involves both companies and end users. In a circular economy new products are remanufactured from a majority of materials returned by consumers. This circular system ensures waste reduction and provides an increase in jobs for the labor needed for high quality recycling and repairing practices. This is why remanufacturing is going to serve a crucial role in the new circular economy.

What Are the Steps In A Circular Economy

what are the steps in a circular economy

A circular economy is not the same as finding the best practices of a linear economy. While many companies are working to reduce the amount of waste used when producing their products, this does not impact the final goal of a circular economy—to keep as much material out of landfills as possible. To best explain the steps of a circular economy we’ll use the example of an ink remanufacturer.

Starting Sustainably: In a circular economy the OEM (original equipment manufacturer) or remanufacturer has a responsibility to sustainably produce their products. This is accomplished by considering the finite life of materials such as fossil fuels, plastics, and metals and properly managing their use in production, thus changing from a model of “consumption” to “usage.” As an ink remanufacturer, the company would receive previously used ink cartridges to create into a new product. Refurbish: This is when the producer creates their product. For our ink remanufacturer, this means cleaning old cartridges, restoring them to new quality, and performing numerous quality inspections. Consumers: Our ink remanufacturer would then sell their product to an everyday consumer or business. Usage & Maintenance: Consumers use the product for its life span. During this time consumer or company maintenance can be performed to expand the lifespan of products (i.e., ink refilling). Collection: This is one of the most crucial steps to the remanufacturing process. After the consumer has used the lifespan of their product, it is time for the recycling process to begin. This is in a multitude of ways. Reuse and redistribution is when the original company that sold the product extends the life of a product through sales or redistribution to consumers. Refurbishing and remanufacturing is when a company, usually a remanufacturer, performs a thorough renovation and repair of a used product. Recycling is when parts or materials are recovered from the product and used again, which is usually performed by a raw materials manufacturer.

After this process  the product’s life cycle begins again.

Why A Linear System Doesn’t Work

To discuss the impactful advantages of a circular economy one must take into consideration the disadvantages of the current linear economy. A common assumption is that the degradation of ecosystems is the sole focus of those advocating for a circular economy. However, linear economies just do not make economic sense for both producers and consumers. For one, the linear economy has continued to face challenges as the uncertainty about material scarcity begins to grow. Since 2006 the fluctuation in prices has increased significantly (as pictured above). This is causing major risks in the market place for raw materials, which will only work to increase the prices for these materials, thus increasing the prices of final products.

Producers are also experiencing a decrease in the lifetime of products. This is especially prevalent in the Western world, which produces a significant amount of the world’s waste. This, paired with the increasing material demand--which is estimated to increase by 3 billion by the year 2030, will leave producers with sharp increases in material costs. While they can continue to spike the prices of their products, modern global connectivity means consumers want products for the lowest price possible. They will begin to look elsewhere. By reducing costs manufacturers can avoid the inevitable market shock others will face. Some ways to do this are reducing power usage in a company’s factory plant, having programs in place for consumers to recycle old products that manufacturers can reuse, and a way to sell products that have not reached their full lifespan.

The Future of A Circular Economy

By implementing a circular economy, manufacturers will be able to see increased employment, economic growth, and substantial resource savings. The circular economy has the potential to lead to material savings of over 70% when compared with raw material extraction in business-as-usual models. According to a study conducted by the Ellen MacArthur Foundation, SUN, and Mckinsey on the effects of the transition to the circular economy, the circular economy will catalyst an employment increase. This is due to an increase in spending because of the lower prices that result from a circular economy, a need for people to fill the labor jobs that are required by high-quality recycling and repair practices, and a need for employees to actively and locally take back products to be recycled.

A circular economy is not only a needed, pragmatic, solution, but also a beneficial and cost effective strategy.


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