The Circular Economy: An Economic Opportunity for Europe
The Ellen MacArthur Foundation today launches "Towards the Circular Economy: Economic and business rationale for an accelerated transition", a new report, featuring analysis from McKinsey, that makes the case for a faster adoption of the circular economy, quantifies the economic benefits of circular business models and lays out pathways for action.
Dame Ellen MacArthur, initiator of the Foundation, explains: "The evolution of our economy from an increasingly resource-constrained 'take-make-dispose' model towards one that is circular and re-generative by intention poses a huge opportunity for business innovation. This report highlights the significant economic opportunities, both immediate and long-term, that are available across the EU. I believe the report offers the catalyst for a sector wide re-design revolution."
Using product case studies and economy-wide analysis, the report details the potential for significant benefits across the EU. It argues that a subset of the EU manufacturing sector could realise net materials cost savings worth up to $ 630 billion p.a. towards 2025 - stimulating economic activity in the areas of product development, remanufacturing and refurbishment.
These numbers are indicative as they only cover "sweet spot" sectors representing a little less than half of GDP contribution of EU manufacturing. They also assume the addition of only one product cycle with today's technologies.
The report focuses particularly on the business opportunity. It examines five product case studies, including one example of cascading material usage, in depth. All cases show a chance for value creation by preserving the embedded labor, energy and material costs in finished products. In mobile phones, for example, 50% of material input costs could be saved by the effective use of remanufacturing.
Considerable environmental savings are also at stake. For instance, the UK economy could save up to $ 1.1 billion (EUR 850 million) annually-and could reduce yearly greenhouse gas emissions by up to 7.4 million tonnes-by keeping food waste out of British landfills.
The resource intensity of the current industrial model presents economic and environmental risks. Many companies and governments are actively exploring the opportunities of efficiency and new forms of energy, but less thought has been given to systematically designing out material leakage and disposal in the first place. This, the report says, is where the case for a circular economy begins.
The Executive Summary:
Towards the Circular Economy - Executive Summary