Circular Economy

04/10/2015 03:03 pm ET | Updated Jun 08, 2015

By Woodrow W. Clark II, MA3, PhD (1) and Danilo Bonato, MBA (2)

There are currently many pressing climate, environmental and economic issues facing Europe and the rest of the world now that will impact our children and grandchildren. That is why the European Commission launched a new, comprehensive research and innovation program in 2013 named Horizon 2020 that will build a more solutions-oriented approach to climate change.

As a matter of fact, it is of particular importance to not only develop a program that is convincing from a research perspective, but also one that is relevant in terms of the goals of the European Union, including prosperity, quality of life, sustainability, growth and jobs. These are the main reasons why another version of this blog post has already been published in Italy. Now it is time to bring this topic and ideas to the U.S.A and other English speaking nations. Then also to other nations around the world. Stay tuned in the EU, Western Hemisphere, Asia and Africa as well as Island Nations as we will be blogging there too with this article soon.

One of the key objectives of Horizon 2020 is to position Europe as a frontrunner in the development of a "circular" and "green" economy that focus on sustainability. At this point in history, the EU needs to enhance its international competitiveness through resource productivity and improving its position for low-impact, resource efficient technology, products and services, in order to achieve its sustainable development goals. This is a dramatic change from the conventional neo-classical economics of Adam Smith (Qualitative Economics, 2008) and needs focus on more than the "market."

The EU (world) is facing a series of systemic crises ranging from economic, environmental, natural resources, social, etc to population growth, conflicts and wars. Eco-innovative solutions are required to tackle almost all of these systemic challenges in order to transform the economies and to make the way of life of European citizens more sustainable. The Green Industrial Revolution book published in 2014
This dramatic green revolution has started in the EU and is now in China and other areas of Asia.

A sound, systemic economic model for eco-innovation within a broader perspective, is needed that considers all innovative solutions which are sustainable from a triple economic, social and environmental point of view or paradigm change called the "Next Economics." The Circular Economy is the best approach that makes the most sense and is now a policy for the entire EU due to Belgium's Presidency of the council of the European Union, Flemish Environment Minister Joke Schauvliege became President of the EU's Environment Council, since appointed in July 2014.

Circular economics was created through a collaboration between American design architect, William McDonough, who was at the Cradle to Cradle (C2C), and German chemist Michael Braungart when they teamed up also with the Ellen MacArthur Foundation in the USA.

One of the key priorities for Europe in the circular economy context. For example, Remedia is active is related to the sustainable supply of non-energy and non-agricultural raw materials. Started in 2005, Remedia has a long-term vision to tap the full potential of secondary raw materials and to boost the innovation capacity of the EU secondary raw materials sector. This dynamic of the circular economy then turns into a strong sustainable pillar of the EU circular and green economy. Industries (and governments) must be active in addressing societal environmental challenges, which increase benefits for every person and community.

This can only be done by gaining relevant knowledge about secondary raw materials in Europe. It also requires that stakeholders, including relevant authorities, raw materials and downstream industries, research communities and society work towards the same objectives for the reuse and recycling of all aspects of products, manufacturing, shipping and sales to the customer. Thus people will know what they are buying and be more concerned with the use and therefore the reuse of their products purchased.

There is a crucial need to improve awareness on critical raw materials and to monitor the dynamic development of the global situation as too many companies still ignore the fact that their products are endangered by the lack of monitored and controlled European resources.

European Commission Critical Raw Materials Matrix. A quantitative methodology applies two criteria - the economic importance and the supply risk of the selected raw materials.

− Economic importance: this analysis is achieved by assessing the proportion of each material associated with industrial megasectors at an EU level. These proportions are then combined with the megasectors' gross value added (GVA) to the EU's GDP. This total is then scaled according to the total EU GDP to define an overall economic importance for a material.

− Supply risk: in order to measure the supply risk of raw materials, the World Governance Indicator (WGI) was used. This indicator takes a variety of influences into account such as voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law or control of corruption.

Critical minerals and metals are essential to low-carbon and environmental technologies, such as solar photovoltaic, wind, lighting and electric vehicle industries. Disruptions of the supply chain can be dramatic in times of crisis from the environmental, social and economic point of views. This is the reason why there is a need for a global picture in terms of raw materials beyond conventional neo-classical supply and demand into collaboration with countries outside Europe. Today products, especially technological and social media ones are global from their creation to distribution and sales. The use of Netflixs, YouTube, Facebook and other forms of communication need to be part of the circular economics that reuses and recycles the end productions into new ones. They entire process needs to be enhanced.

Success will be seen and thus be able to achieve a number of improvements in access and availability to raw materials, sustainable management of resources within a greener and more circular economy and world- leading innovations both in technology and business practices to meet the growing demand and secure the supply. This effort should also result in changes in consumer behaviour that are more consistent with the sustainable use of our raw materials.

(1) Clark, Qualitative Economist, with three separate MA degrees and a PhD, is a global author (9 books), professor and advisor to governments and companies through his company, Clark Strategic Partners established in 2014. Contact:

(2) Bonato, Managing Director of ReMedia who at Polytechnic of Milan became an engineer and then a MBA from San Diego State University, working in the USA tech industry before starting ReMedia in 2015. Contact: