The Circular Economy: Focusing on Stocks instead of Flows
3 min read

The Circular Economy: Focusing on Stocks instead of Flows

The imperatives of sustainable development are challenging both the notion of economic growth and our prevailing economic model. An economic model based on ever-increasing production/consumption logic and reinforcing dynamics generating the detrimental impacts on people and nature that most of us are aware of.

The circular economy is more and more recognized by governments, businesses, and civil society for its ability to address the limited availability of natural resources, doing so by maintaining materials in use for as long as possible through reducing, reusing, sharing, and recycling approaches.

The circular economy as a new economic model has matured over the last 50 years and its potential for fueling economic growth and supporting technological development has long been acknowledged by Professor Walter Stahel, the recognized father of the circular economy. In 1982, in his Mitchell Prize winning paper, Product Life Factor, he described an economic model “based on a spiral-loop system that minimizes matter, energy flow and environmental deterioration without restricting economic growth or social and technical progress”[1].

As Walter once told me: “This view of the economy remained an academic topic and industry and governments did not buy it”. For more than 30 years, like-minded researchers studied and understood how a globalized and profit-oriented economy was made possible because of increasingly low prices of energy and materials. However, because of the limited ability of our planet to produce those resources, researchers also forecasted multiple undesirable consequences, namely:

  • A 21st century witnessing a constant increase of the prices for energy and materials,
  • Depletion of natural resources, deforestation, and water and air pollution,
  • Social inequalities and tensions,
  • Resource security issues leading to a major political bone of contention.

To address those consequences, the circular economy was fundamentally conceived as a more decentralized and contextualized model generating value, growth, and job opportunities from the management of available stocks instead of flows of production and consumption of globalized short-lived products. This conception was deeply anchored into the work of Kenneth Boulding, a notorious American economist and peace activist. In 1966, Boulding used the metaphor of a “spaceship” to describe a ”spaceman economy, in which the earth has become a single spaceship without unlimited reservoirs of anything, either for extraction or for pollution”, further warning us about “the wastes involved in planned obsolescence, in competitive advertising, and in poor quality of consumer goods”, and how “our obsession with production and consumption to the exclusion of the “state” aspects of human welfare distorts the process of technological change in a most undesirable way”[2].

Reflecting the more recent adoption of the circular economy by governments and businesses, incumbent firms and startups are today aiming to contribute to a more circular economy. As a result, an increasing number of companies have submitted their solutions to the Foundation based on the claim to be circular. A quick analysis of the solutions which received the label on that ground shows that a larger part of these solutions addresses the most downstream component of a take-make-waste linear model, that is “waste”. Today, more than 60% of the solutions fall into the categories of waste management, waste recycling, or waste for energy transformation.

While managing and recycling existing waste is important to reduce pollution, the promises of the circular economy won’t be achieved without the prevention of waste in the first place and therefore the adoption of more upstream business models aimed at maintaining products in use for as long as possible and circling back raw materials. The remaining share (40%) of the labeled solutions achieve such goals and are circular by design, these solutions offer compelling propositions generating value and fueling economic growth by offering products as a service, enabling consumers to share, reuse, or repair goods, or by allowing the recovery of virgin molecules that can then be cycled back as raw materials.

The Solar Impulse Foundation is actively looking to increase this second share of the labeled solutions. Indeed, while managing waste is critical in order to empty the limited reservoirs of waste and pollution that our spaceship Earth can carry, upstream circular solutions are required to help close the tap, avoid overflow, and allow economies across the world - developed or less developed - to keep growing within planetary boundaries.

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