Linear Economy vs. Circular Economy – Lisboa Green Capital 2020

Linear Economy vs. Circular Economy

Every year about 2.5 million tonnes of waste is produced in the European Union. With this in mind, in 2015 the EU adopted the Action Plan for the Circular Economy, which aims at sustainable growth in the European Union and stimulates Europe’s transition to a circular economy.

The action plan sets out 54 measures to “close” the product life cycle, from manufacturing and consumption to waste management and the market for secondary raw materials, and identifies five priority sectors to accelerate the transition along their value chains (plastics, food waste, essential raw materials, construction and demolition, biomass and bio-based materials). Great importance is attached to establishing solid foundations on which investments and innovation can thrive on.

Linear Economy:

It is a form of society’s organization based on the increasing extraction of natural resources. Products made from these resources are used until they are discarded as waste. Thus, in this form of economy, the maximization of the value of the products is due to the greater amount of extraction and production.

This type of economy is considered to be a form of economic organisation that is not viable because, in the long term, the resources on the planet will be insufficient to maintain this economic model.

Disadvantages of the linear economy:

– Uncertainty about the availability of the planet’s resources for maintaining the economic system;
– Countries dependence on necessary raw materials;
– Great impact on the environment – extraction and use of these raw materials increases energy consumption and CO2 emissions;
– Price volatility – the fluctuation of commodities (quality products and standard characteristics, which are not differentiated according to who produced them or their origin. Their price is determined by international supply and demand) leads to an increase in average prices;
– Reduced product lifespan.

Circular Economy

This type of economy implies that all products and services originate from factors of nature, and that at the end of their useful life they return once again to nature through waste or other forms with less environmental impact.

It is a production and consumption model that involves the sharing, reuse, repair and recycling of existing materials and products, increasing their longevity cycle.

In a circular economy, the value of products and materials is maintained for as long as possible, waste production and resource use are reduced to a minimum, and when products reach the end of their useful life, resources are kept in the economy to be reused and generate value again.

Benefits of circular economy:

– Aid in combating climate change;
– Conserves natural capital;
– Decreases carbon emissions;
– Promotes eco innovation;
– Reduces dependence on fossil fuels;
– Minimizes waste production;
– Creates new opportunities and business models, products and services;
– Increased competitiveness;
– Creates new jobs;
– More durable products.

Image Credit: European Parliament