Adopting a circular economy could save $700bn

WRAP circular economy

Image courtesy of WRAP

The global economy could save $700 billion (£448 billion) if it reduced the use of raw materials in consumer goods and adopted a circular economy, a new Ellen MacArthur Foundation (EMF) report has found.

The second volume of EMF’s ‘Towards the Circular Economy’ report, released today (25 January) follows on from the findings of the 2012 report and puts forward a case for the faster adoption of an economic model that ‘decouples economic growth from resource constraints’ by designing out waste.

The ‘Towards the Circular Economy Vol.2: opportunities for the consumer goods sector’ report, suggests that the adoption of a ‘circular economy’, one in which the use of raw materials is significantly reduced, could have a value of $700 billion ‘in consumer goods material savings alone’.

According to the report, consumer goods make up ‘approximately 60 per cent of total consumer spending’ and ’35 per cent of material inputs into the economy’, absorbing ‘more than 90 per cent of [the world's] agricultural output’. This, the report says, could become the world’s ‘most embattled’ resource.

The EMF suggests a number of tangible ways in which savings could be achieved, including:

  • Collecting and processing household food waste in order to ‘generate biogas and return nutrients to agricultural soils’, generating a potential income of $1.5 billion per year for the UK alone;
  • Collecting and reusing textiles, with estimated global material savings of a $71 billion;
  • Reducing ‘material inputs’ and the ‘price of packaging’ in the beverage manufacturing process by switching to re-useable glass, returning a cost saving of 20 per cent per hectolitre of beer.

According to the EMF, the idea of a ‘circular economy’ has quickly ‘gained the attention’ of businesses and governments internationally and will this year form a central part of the agenda of four of the World Economic Forum’s official sessions.

Ellen McArthurtDame Ellen MacArthur, initiator of the EMF, said: "We have seen tremendous momentum building behind the circular economy in the last year. With this report showing a USD 700 billion opportunity for the consumer goods sector alone and making the economic case clearer, we expect to see more and more businesses exploring this new way of thinking.”

MacArthur went on to announce that the EMF will be launching ‘Circular Economy 100’ next month, to “bring together major companies and accelerate business innovation”.

It is hoped that ‘Circular Economy 100’ will draw together the circular economy initiatives being undertaken by the Foundation’s founding partners B&Q, BT/CISCO, National Grid and Renault, thus allowing them to ‘collectively target’ resource savings and new revenues totalling in excess of $1 billion.

Chris Dedicoat, President of CISCO EMEA, said: “The Circular Economy offers a profound transformational opportunity, which represents the interests of both the global community as well as the next generation. Transitioning towards a regenerative model will stimulate economic activity in the areas of product innovation, remanufacturing, and refurbishment, and in turn generate employment.”

WRAP figures

The Waste & Resources Action Programme (WRAP) also today released a report on the potential savings of a circular economy (WRAP’s vision for the UK Circular Economy to 2020) which shows that between 2000 and 2010, there were 30 million tonnes (Mt) less direct material input going into the economy, 30Mt less being consumed, 70Mt less waste generated, 70Mt more materials recycled and put back into the economy and 55Mt less going to landfill and energy from waste.

According to Dr Liz Goodwin, CEO of WRAP, by 2020 there could be 30Mt fewer material inputs into the economy, 20 per cent less waste produced (50Mt) and 40Mt more materials 'recycled back into the economy'.

The report lists four 'key ways' of realising these savings. These are:

  • 'lean production' (i.e. making goods with a lower material requirement);
  • reducing waste in manufacture and commerce;
  • reducing the amount of working products thrown away;
  • and increasing the proportion of products which are leased.

Writing in a blog on WRAP's website, Goodwin said: 'This work echoes what the Ellen McArthur Foundation is saying … that is, that it is possible to get more from the resources we use and by applying a circular economy model, we can unlock value that in the past, was lost to UK plc.

'Creating and stimulating economic growth has never been more important and it is my view that this circular economy is absolutely key to making it happen.'

In November 2012 Welsh Environment Minister, John Griffiths, announced the Welsh Government’s dedication to working towards a circular economy, suggesting that potential savings to Wales could, as a result, amount to £1.7 billion per year.

Read the ‘Towards the Circular Economy Vol.2: opportunities for the consumer goods sector’ report.