The linear economy, a hallmark of modern economies, takes resources from the ground and turns them into products that ultimately become waste and are thrown away.
It designs and manufactures products for the consumer without accounting for the resources used to make them or what happens to the product at the end of its life.
Often it is considerably more expensive — or impossible — to repair something when it breaks compared to replacing it. This was demonstrated in last week's Black Friday sales, which saw consumers rush out to the shops to snag a discount deal — often items that will have a short life and be soon destined for the landfill.
In contrast to the "take-make-waste" model of a linear economy, a circular economy is an economic system aimed at eliminating waste and the continual use of resources and is designed to benefit businesses, society, and the environment.
It aims to gradually decouple growth from the consumption of finite resources and is increasingly seen as the driver to help reach the UN's Sustainable Development Goals.
The New Zealand Government has identified the circular economy approach as an important principle for addressing resource and waste issues for the country's future.
The Ministry for the Environment defines it as "an alternative to the traditional linear economy in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life."
It says when a product is designed for the longest use possible — and can be easily repaired, remanufactured or recycled (or used, composted and nutrients returned) — it can be considered to have a circular life cycle. A circular economy is fuelled by renewable energy, such as solar, hydro, wind, tidal and biofuels.
The New Energy Futures Paper: Batteries and the Circular Economy paper, released last week, outlines the six enabling factors required for a circular economy:
1. Systems thinking: Organisations take a holistic approach to understand how individual decisions and activities interact within the wider systems they are a part of (e.g. material, operational, financial, social and ecosystems).
2. Innovation: Organisations continually innovate to create value by enabling the sustainable management of resources through the design of processes, products/services and business models.
3. Collaboration: Organisations collaborate internally and externally through formal and/or informal arrangements to create mutual value.
4. Value optimisation (retaining value): Keeping products, components and materials at their highest value and utility at all times.
5. Transparency (open communication): Organisations are transparent about decisions and activities that affect their ability to transition to a more circular and sustainable mode of operation and are willing to communicate these in a clear, accurate, timely, honest and complete manner.
6. Stewardship: Organisations manage the direct and indirect impacts of their decisions and activities within the wider systems they are part of. This can include product stewardship or Extended Producer Responsibility (EPR), where businesses take back their products to refurbish and resell.