Linear economy vs circular economy: Key differences and how to make the change
Learn how to transition from a linear economy to a circular economy and the important differences between them in this article.
The concept of circularity is not a new one, but in recent years it has received a lot of attention across the world, inspiring environmentalists, governments, and businesses alike. To better understand the circular economy and how to transition to this sustainable economic model, it’s essential to recognise what makes it different from the current industrial linear model.
This article presents the key definitions and clear comparison between the linear economy and the circular economic models and will discuss how to make the transition.
What is the linear economy?
The linear economy is based on a traditional linear business model and follows a “take-make-waste” scheme.
Resources are taken from their source and transformed into products manufactured for consumption. The residuals of this consumption later accumulate in a landfill or are incinerated.
The way a linear economy deals with raw materials puts pressure on scarce resources and has little concern for environmental impact. Businesses produce and sell as many products as possible with profit as their only goal, leaving many economic opportunities untapped.
What is the circular economy?
The circular economy stops waste from being produced from the start, designing products that can be reused as intensively as possible. It’s a different approach. It aims to reduce the use of raw materials and instead reuse materials reclaimed from end-of-life products.
The circular business model focuses on extending the life cycle of products while maintaining or improving their value. It replaces the traditional concept of end-of-life with the idea of restoration and circularity, closing the loop in the industrial ecosystem.
What are the key differences between the linear and circular economy?
The main differences between the linear and circular economy are their general approach, their vision of how value is created or maintained, the perspective they have when working on sustainability, and the adopted business model.
1. Approach
The fundamental difference between these two economic models is that while the linear economy follows the “take-make-waste” step plan, the circular economy follows the 3R approach of “reduce, reuse, and recycle”, completely removing waste from the equation.
2. Vision
The circular and the linear system differ from each other regarding how value is created or maintained. The traditional linear model has short-term revenue in mind and only focuses on profitability, creating value through mass production and sales.
The circular approach, on the other hand, has a long-term vision that also considers sustainability throughout a product’s life cycle. Through the update, repair, and regeneration of products, longer life cycles can be achieved.
3. Sustainability perspective
When considering sustainability, the linear economy works towards eco-efficiency, trying to achieve the same result while reducing the environmental impact generated. This doesn’t enable circularity and it only delays the linear flow of resources from production to waste by reprocessing materials into a product with less value (downcycling).
Alternatively, the circular economy attempts to increase the eco-effectiveness of products. The environmental damage here is completely eliminated and even a positive impact is possible. It abolishes the idea of waste and converts materials into something of greater value than they originally had (upcycling).
4. Business model
The current linear economic model focuses on products, which are produced, used, and then thrown away as waste.
The circular model focuses on services instead, offering a single service that can be used by many instead of the same product replicated for multiple individuals.
Transitioning from a linear to a circular economy
Given the planet’s limited resources, the environmental impacts of the traditional linear economy business model are concerning. Government, companies, and consumers each have a crucial role to play when transitioning from a linear to a circular model of production and consumption.
The shift to circularity goes beyond recycling and reusing materials. It requires a meticulous evaluation of the impact products and their components have in every step of their lifecycle. It needs actions and policies in place to succeed.
There are many ways to incorporate circular practices into a company. Collaboration between businesses and stakeholders across the value chain and a consumer mindset change is essential.
The United Nations Environment Programme (UNEP) explores some key drivers that businesses may consider when transitioning to more circular business models:
1. Entering new markets
The demand for green products and services is growing and the markets for low-emissions offerings are expected to expand further. The transition from a linear economy to a circular model can make companies enter these new markets and increase their market share.
They can also maximise the value of a product by keeping it in the circular loop, extending its life cycle through reuse, refurbishment, or remanufacturing. The increasing demand for net-zero products is creating unprecedented opportunities for businesses and countries to implement a circular model.
2. Attracting and retaining talent
A purpose-driven company has higher productivity and growth rates, along with a more satisfied workforce with lower employee turnover.
A strong commitment to a circular model helps companies attract and retain the best talent. This is especially true among the younger generation that has strong environmental concerns and is eager to get involved and be an active part of the solution.
3. Reducing risk and future-proofing the business
The circular economy seeks to create industrial systems that are restorative or regenerative by intention and design.By shifting from a linear economy to a circular one, companies can reduce their dependence on suppliers and lessen their corporate risks minimising the use of virgin materials and incorporating alternative materials taken from existing products.
Using more sustainable materials — such as refurbished, renewable or recycled materials — can improve the supply chain resilience and help businesses manage future demand for circular products and meet their customers’ needs.
4. Triggering innovation
When shifting towards a circular economy, companies will need to reevaluate the way they think about products, technologies, processes, and business models. Innovation is a key driver in this transition away from the wasteful linear economy system.
Circularity, then, serves as a “rethinking device”, triggering creative new solutions and boosting innovation rates so that businesses can satisfy key societal and market needs.
Bringing circularity to the tire industry
At Contec, we believe that the circular economy has a pivotal position to play in the tire industry. Our mission is to be a driving force, transforming the industry towards carbon neutrality. Currently, we’re contributing to circular principles in two major areas:
- Circular product creation — Our circular products are replacing petroleum-derived products with high-quality and low-carbon solutions.
- Contec process — We’re continuously optimising our pyrolysis process to be more sustainable and resourceful. Our Szczecin plant runs on 100% renewable energy, generated from our pyrolysis process.
Overall, it’s our vision to close the loop in tire production by enabling a tire-to-tire model and supporting manufacturers with circular solutions in the plastics industry. Get in touch to learn more about our sustainable solutions.
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