Principles The Circular Economy: a different approach to managing resources and creating value

After the ‘take-make-waste’ model that people have lived with for centuries, the Circular Economy promises to do things differently. But how will it be different? How will the objectives change for companies? And what will it mean for the products that people need?

Policy and research teams within the Luxembourg government have developed answers to these questions, drawing on a range of internal and external expertise. Before being translated into specific policies and programmes, those answers started out as a set of building blocks for creating a Circular Economy. There are just five of these, and yet they are at the heart of a transition that is already underway.

Building a Circular Economy means:
  1. Taking a truly comprehensive approach to managing products, components and materials throughout their whole use cycle; from the idea stage, right through to the tangible end-result. This also includes a human element. It means companies and public authorities talking to their suppliers and partners about the impacts of what they do, and finding ways of sharing both the value and the costs.
  2. Distinguishing between the two different types of life cycles; one is technological, as it covers products, components and materials, with the aim being to return them to the cycle after use. The other cycle is biological, which covers food and other organic material. The objective here is to return this material to the soil, thereby regenerating the land, protecting ecosystems and creating new opportunities, such as energy from biomass. The ultimate aim of both cycles is to close loops, and so avoid waste.
  3. Designing quality products that retain their value (economic value, usability and material value) for as long as they are in use. With 80% of a product’s environmental impact being determined at the design stage, it is essential to get things right from the start.
  4. Encouraging manufacturers and their suppliers to provide clear, honest and up-to-date information about their products, components and materials. This information needs to be easily available throughout the relevant life cycles, so that every company in the chain - and every consumer using the product - can have their questions answered.
  5. Developing new business models that encourage people to share their use of - or access to - a product or service, instead of seeking personal ownership. Car-sharing, instead of car ownership, is a classic example of a single product meeting the needs of many people.

For companies across the economy, the common theme throughout both the technological and biological cycles is recognising value. Specifically, that involves (1) creating value, (2) retaining it and then (3) recovering it. Creating it means developing quality products that are not only designed to last, but to be dismantled and their materials/components returned to the cycle. Once in use, that value should be retained through repair and maintenance, which would also help to extend a product's useful life through the second-hand market. Finally, the value is recovered through reuse, remanufacturing, and/or recycling, so that, ideally, it is never completely lost. For more information please click on the pictures to the right.

The value hill in a circular economy (Source: ‘Null Offall’ strategy Luxembourg, adapted from Circle Economy - NL).

In the Luxembourg 'Null Offall' strategy the value hill and the waste hierarchy of the European Commission have been integrated in one single scheme of a resource triangle, to ilustrate the connection between waste prevention measures and circular economy principles. The resulting resource diamond and resource leaf for the biological and technological cycles, respectively, are shown below (click on the pictures to enlarge them).

The resource diamond integrates the waste hierarchy and the value hill for the technological cycle (Source: 'Null Offall' strategy Luxembourg) 

The resource leaf integrates the waste hierarchy and the value hill for the biological cycle (Source: 'Null Offall' strategy Luxembourg) 

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