Circular economy: find out what it is before it's too late

In 2018 there was the highest concentration of carbon dioxide in the atmosphere in 3 million years. Seventeen of the eighteen warmest years on record have occurred in the last 20 years, according to NASA. Currently, 800 million people are in danger because of climate change. These three pieces of information alone should be reason enough to understand one thing: a change is essential.

In this case, the problem is not capitalism, as many people might think. The reality is that any other system would be involved in the same circumstance. And it is that the real problem lies in the production system. Just 20 companies contribute to global warming with 35% of global carbon dioxide and methane emissions, according to The Guardian. Only five companies manufacture a quarter of the non-reusable plastic on the entire planet, according to data from the Minderoo Foundation.

In this sense, the simplest answer would be to blame these companies and punish them. However, all consumers who promote these company practices should also be pointed out. All this trend towards the destruction of the planet responds to one thing: the linear economy.

Yes, we live in a world in which the production system is based on 'buy and throw away'. Companies extract raw materials, refine them and convert them into materials that will later be used to make a product that will later be sold and, finally, discarded. A process that will be repeated as many times as consumers demand.

The problem is not only in all the products that are discarded once their useful life is over, but we also generate a massive amount of waste and polluting discharges in each of the parts of the process. Waste that ends up in the rivers, lakes and seas of the planet.

Coca-Cola, PepsiCo, Nestlé and Unilever are responsible for more than 500,000 tons of plastic waste a year in six developing countries, enough to cover the surface of 83 football fields every year. days, according to a report prepared by the British NGO Tearfund.

On the other hand, all these raw materials are finite: once they run out we will not have them again. Of 60,000 tons of raw materials extracted in a year, half are not regenerated, according to data from the Cotec Foundation. In other words, this productive system has its days numbered. One must consider how to generate a different system that addresses this problem tangentially.

The linear economy is a problem for both businesses and consumers

It is easy to conclude that it is impossible to solve this problem without hurting one of the parties. Companies could lose a lot of money, or even customers would not want to change their consumption habits.

But what if both parties could benefit from the change?. The reality is that both companies and consumers lose a lot of money in the current system of a linear economy. All these processes that companies carry out to reach the final product are extremely expensive and, consequently, substantially increase the price that the consumer is going to pay. The Consumer Price Index (CPI) has increased by 3,744% in 60 years, according to the INE.

This problem is already a matter of debate in the European Union, which is aware that this change has to come and is laying the foundations for it to happen. The solution that the experts propose is a transition towards a different model of production and consumption: the circular economy.

What is the circular economy?

Based on the fact that pollution increases and raw materials decrease each time a product is manufactured, and that each time one of these goods is purchased it ends up becoming waste at the end of its useful life, what Could it be changed to stop pollution and lower the price of products?

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— Hivotip Maludi Tue Feb 21 23:32:50 +0000 2012

The circular economy addresses this problem and provides a solution: not only recycle, but reuse raw materials. What does this mean? Carry out a transition towards a production model that reuses the materials with which the product has been manufactured.

Here appears the first problem for companies: "how can I dispose of these materials if I no longer have the good that I have sold?". Renting it. It may seem strange but it is not that strange.

In 2005, DVD sales in the United States reached 13.9 billion euros, according to data from the auditor Nash Information Services. In 2018, they only reached about 1,870 million euros. This extraordinary drop in sales is due to the appearance of certain companies that allowed you to not have to pay to own a movie, but pay a monthly catalog to see any series or feature film whenever and wherever you want for a much more affordable price than having to buy all the tapes. The company that revolutionized this market was Netflix. Nowadays, no one sees this type of consumption as strange.

In 2006, another company thought that all those people who don't have a car and need to travel to another city also had the right to be able to do so without having to pay large amounts for public transport. This company decided that the best way to solve this problem, and incidentally pollute less, was to put these people in contact with others who had a car and went to the same destination. This company was BlaBlaCar, a company that is currently valued at over $2 billion.

These two cases are not examples of circular economy, but they do perfectly describe the tendency of consumers towards dispossession. This is what companies have to take into account to reach a better production model.

The circular economy proposes that the company rents the product to the consumer instead of selling it to them. In this way, the asset will always be owned by the company.

Based on the example of a car, the company would manufacture the car as it had been doing up to now, only now it would 'rent' it to the customer ad infinitum. For practical purposes, the consumer would be buying it for a fixed price, only that at the end of its useful life, instead of throwing it away and turning it into another polluting waste, it would be returned to the company.

But who benefits from this change? What if the company made 'upgradable cars'? In other words, if the company manufactured a car to which improvement could be implemented, the customer would not have to buy another when it stopped working, they would take the car to the company and the company would install a new engine. However, people also want to be in the latest fashion with the exterior design of the car. What if the factory could easily change the chassis for a more modern one? You could also change the old and outdated sound system for a state-of-the-art one.

You just have to imagine this model with any type of product: a mobile phone, a television, a computer, even clothes. "In Spain, subscription proposals are emerging to rent clothes periodically instead of buying them. A very interesting option for garments that may only be used for a limited time, such as clothing for children or for pregnant women," explain the experts from the Organization of Consumers and Users (OCU).

In this way, the price of the product could be significantly cheaper, since the company would not have to manufacture another new product. However, companies could come to think that it does not benefit them at all to sell fewer products and, above all, at a lower price.

The reality is that by not having to manufacture so many goods, you would be saving a significant sum both in the extraction of materials, as well as in refining them and in the subsequent manufacture of the product. And, in addition to this, you would be avoiding contaminating the planet in each of these processes, also saving the payment of taxes linked to pollution.

But the question of why rent the product instead of buying it still remains to be answered. Once this circular economy model has been implemented in the company, it will only have to worry about manufacturing the improvements that will be made to the product, such as a new chip or a more modern interface. In this way, returning to the example of automobiles, each time the customer leaves the car at the factory to implement an improvement, such as a new engine, the company could use the old materials to manufacture more products or, in the case of not being able to reuse them in your own business, sell them to other companies that could reuse them. Thus, the company would again be saving production costs and, in addition, reducing pollution.

Governments encourage the implementation of these models in companies

"A Europe that uses resources efficiently", this was one of the seven initiatives that were part of the Europe 2020 strategy that aims to generate a smart, sustainable and inclusive growth. It is currently Europe's main strategy to generate growth and jobs, with the backing of the European Parliament and the European Council.

The Mechanism for Recovery, Transformation and Resilience NEXT GENERATION has been designed under four fundamental pillars of the circular economy, among which is the Green Pact, which aims to change the energy system and provide it with a more efficient production , using recycled and less polluting material.

In Spain, for example, this year Resolution TES/3250/2020, of December 10, has entered into force, approving the regulatory bases for subsidies for projects to promote the circular economy< /b>.

More and more companies have joined this model. The Gipuzkoan company, Eko-rec, produces automotive components and sheets for trays for the food sector from PET (Polyethylene terephthalate) waste, the plastic material with which most water and soft drink bottles are made. The company Zicla uses, for the manufacture of the ZEBRA bike lane separator, those from recycling of end-of-life electrical cables. Through a technology that Rebattery, an SME from Gipuzkoa, has developed, the useful life of car batteries can be extended. For more than 40 years, the WAT company has specialized in the manufacture and remanufacturing of steering systems. Remanufactured products are sold to the market with the same conditions and guarantees as new products, which makes it possible to speak of remanufacturing, and not of repaired or second-hand products.

But, to prevail, this system will need the support of all parties: Governments, companies and consumers. Many companies worldwide have already joined this initiative thanks to the help of the Administrations and the support of their clients.