The concept of circular economy builds on thinking of products from cradle-to-cradle. This encompasses new design paradigms (e.g. modularity), returning and collecting products after their service-life, reuse and recycling as well as using other waste streams as a source of raw materials.
Circular economy has the potential to transform waste to value and reduce dependencies on finite resources. It also holds promises for economic gains. McKinsey estimates that by 2030 it could generate EUR 1,800 bn in benefits for Europe. Key drivers are increasing scarcities of natural resources and growing waste mountains, both a result of the consumerism of a booming middle-class. An additional driver is the growing attention to sustainability (e.g. the Paris agreement) and resulting growth of demand for sustainable products. Circularity then allows manufacturers to secure their supply base while simultaneously charging a premium price.
Circularity also brings about new business models. One example is selling functionality as a service rather than as a product (e.g. x kilometers driving performance instead of tires), making products easier to collect and recycle after their service-life. This type of business model also changes the customer-supplier relationship, emphasizing continuous relationship over one-off sales.
Today, estimated 6-12 % of resource use in the EU is avoided due to recycling and waste prevention. With innovative measures along the value chain, material inputs in the EU could be reduced by 24 % by 2030.