Recently, several academic articles have questioned the circular economy (CE) concept on the grounds that it will not be able to decisively reduce environmental impacts as it operates in and supports economic growth. These “degrowth critiques of circular economy” argue that we need to change the way we utilise energy and materials more fundamentally to achieve necessary transformations.

What is the problem?

In short: It is not possible to “circle” an economy out of growth (George et al., 2015). Both energy and material consumption are so tightly linked to economic activity (Wiedmann et al., 2015) that CE in its current form is not likely to be able to decouple this link.

Efforts to increase resource efficiency have in the past not led to the desired reduction. This is because gains in efficiency tend to lead to the paradox situation that they increase consumption. This has been true for more than 150 years and is known as Jeavons’ Paradox (Bauwens, 2021). CE principally fails in preventing or mitigating this rebound effect (Corvellec et al., 2022). For example, money saved on leasing, renting, sharing, or pooling a product is likely to be spent on other, potentially more environmentally damaging activities (Hofmann, 2019).

A panel data analysis of CE in 28 European countries indeed confirmed that economic growth in these countries was responsible for increasing resource extraction four times more than CE practices helped to reduce it (Bianchi and Cordella, 2023). As long as the stock of materials in buildings and infrastructure is growing, the extraction of primary resources will remain necessary, as the supply of recycled material will not be sufficient (Bianchi and Cordella, 2023). And even if an equilibrium could be achieved, i.e. a zero net-addition to stock situation where all new construction material demand is satisfied with secondary materials, non-recyclable materials such as fossil fuels and some biomass will still need to be extracted. This holds true for replacing fossil with renewable energy, since this requires an increased amount of metals and other materials, all of which will need to be extracted first.

Due to the laws of thermodynamics, completely closed material loops will never be possible, i.e. virgin raw materials will always be needed, even to just keep the status quo, let alone grow economies (Corvellec et al., 2022). A complete substitution of conventional linear products is not only unlikely, it is impossible in principle.

Hence what is needed is a deliberate downscaling of the linear economy and a redesigning of the circular economy to focus on the prevention of material use in the first place.

Is pursuing a circular economy futile?

Current circular business models are still mostly driven by a vision of continued economic growth, in the hope of absolute decoupling coming about (Hofmann, 2019). Even the most ambitious policy initiatives from the EU so far have been technocentric and focussed on promoting growth, rather than on downscaling the linear economy (Corvellec et al., 2022) (even though some recent initiatives on banning planned obsolescence in France and on phone chargers provide some rays of hope). As a consequence, linear business models still prevail by far over circular innovations. And, given problems with inferior quality, contamination, supply limitations and price uncertainty of secondary resources, this will remain the case if not more stringent legislation and regulation is introduced. (Bauwens, 2021)

The only credible way shown in studies to bring humanity’s environmental footprint back to within planetary boundaries is a downscaling of energy (Diesendorf) and material use (Lenzen/Schandl/Hickel), foremost in developed countries (Washington, 2021). To this end, the CE will be an indispensable requisite, not an end in itself.

Pursuing a circular economy is not futile. But pursuing it within a growth-driven economy is bound to fail. CE will need to grow to achieve its aims (Kirchherr, 2022), which is why downscaling the linear economy at the same time is absolutely essential. The only long-term viable solution can be a post-growth or steady state approach to our economies (Bauwens, 2021).

A reorientation of values and goals will be necessary, from maximising profits of private companies to maximising societal and planetary wellbeing. This needs to be implemented in companies and governments at all levels (Bauwens, 2021). It is crucial to consider consumption and consumer behaviour when designing circular economies (Bianchi and Cordella, 2023). The CE will only work if the role of consumers is radically transformed into one of informed, conscious and willing users of products who suppress the urge to acquire the latest thing with a desire to care about a product’s life cycle impacts (Corvellec et al., 2022). Such a change in consumer culture will not emerge without addressing fundamental issues of ownership, advertising and power (Corvellec et al., 2022).

Despite its good intentions, CE in its current conception as a means to growth is set to just tinker with the current model of consumerism, extractivism and growth capitalism, without profoundly changing it. For a truly sustainable economic transformation, business, institutional and governance models need to change at company, country and global level.

A way forward

We must not fall into the resource efficiency trap – not again. The concept and practice of CE needs to be refocussed on replacing linear economy processes, protecting biodiversity and ecosystems and a just redistribution of resources, and wellbeing for people and planet (D’Amato, 2021).

Companies have demonstrated that value and wellbeing for both humans and nature can be generated with adequate business, ownership and governance models (such as the Patagonia example). This needs to be encouraged and supported by strong policies that prioritise environmental sustainability and societal wellbeing (Hofmann, 2022). Granting a “right to repair”, banning planned obsolescence, making producers responsible for product lifecycles, correctly pricing externalities, redirecting subsidies etc. are examples of policies that can and should have been implemented in the current system a long time ago.

But more is needed. Circular business models need to create value by truly slowing and reducing resource flows and curbing the throughput of materials in societies (Hofmann, 2019). CE has the potential to be disruptive, but only if it is combined with and operated within a transformative economic system. The idea of degrowth in wealthy nations is no longer an academic niche phantasy, it is set to become a serious contender of mainstream economic thought (Hickel et al., 2022).

There is an opportunity for all stakeholders – academics, practitioners and governments – to creatively test and develop economic models that are circular and operate within planetary boundaries. Most important of all will be cooperation to achieve a redistribution of knowledge and power (for example, through open source models) that enable a more equitable distribution of earnings and assets (Hofmann, 2019).

This blog is dedicated to Dr. Haydn Washington, who passed away on 10 December 2022.

Professor Tommy Wiedmann is Professor of Sustainability Research, Sustainability Assessment Program in the School of Civil and Environmental Engineering at UNSW, Sydney.

References

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