I am back for part 2 of last week’s post where I covered a few economic conditions that countries, industries or firms must consider when adopting circular economy practices. However, when done with prudence, it has been estimated that a circular economy approach could result in a 3% increase in resource productivity by the year 2030, resulting in €600 billion of cost savings annually and an additional €1.8 trillion from other economic benefits (Source). Thus for today’s post, I shall be elaborating more about the possible ‘savings’ entities could accumulate by switching to a circular economy.
Firstly, reducing reliance on primary resources such as steel drives down the demand for raw materials which often have very high price volatility. For example, from steel alone, the global savings could be up to 100 million tonnes of iron ore in 2025 (Source).
Moreover, the circular economy is expected to create many more jobs, as part of ‘green jobs’. Global employment is expected to grow by 0.1% by 2030 due to this growing sector. This will be especially so in the waste management and services sector(Source). However, this will involve moving away from the primary sector which is resource-heavy to recycling and repairing activities. This could result in structural unemployment and hence the effects on employment will have to be monitored.
Last but not least, circular economy practices drive innovation and provide more opportunities for entrepreneurs to develop more efficient technology (Source). The desire to go against what has been practised for decades — linear production — is a thought-provoking process that encourages producers to develop new systems, especially with the possibility of cost savings. I think this is one of the most exciting aspects of the circular economy as we get to continuously learn about all kinds of innovation being developed.
One example of such technology is the development of the “FLAM” material from a few researchers in our own Singapore University of Technology and Design (SUTD). This material utilises plant-based waste materials and possibly even prawn shells to produce a completely biological-based material replacement for plastic (Source)!
It is innovations such as this make this space a very interesting one to watch and I certainly hope to learn of more up and coming novel technology!