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The Circular Economy

The Government wants to move the UK economy from linear to circular.

As set out in the UK government’s ‘Net Zero: Build Back Greener’, a move to a ‘circular economy’ will be a key tenet of the policy which seeks to make the country achieve Net Zero by 2050. In fact, the report mentions the term 19 times. But what does it mean? The term was coined in 1989 by two British environmental economists, David W. Pearce and R. Kerry Turner, in their book ‘Economics of Natural Resources and the Environment’. They defined it as ‘an economy that is based on the principles of reducing, reusing, and recycling materials in production, distribution, and consumption.’

The subject of their book was the negative environmental effects that prevailing economic models – taking finite resources, manufacturing goods from them, and ultimately throwing them away as waste – is having on the environment. A circular – as opposed to a linear – economy mitigates the negative impact of production and – when powered by renewable and non-polluting energy sources – can, proponents argue, lead to environmentally sustainable means of production. As the Ellen Macarthur Foundation puts it: ‘The circular economy tackles climate change and other global challenges, like biodiversity loss, waste, and pollution, by decoupling economic activity from the consumption of finite resources.’

A load of rubbish…

According to the latest UK Statistics on Waste from the Department of Environment and Rural Affairs (DEFRA), the UK generated 222.2 million tonnes of total waste in 2018, with England responsible for 84% (187.3 million tonnes) of the UK total. Of this, 62% came from Construction, Demolition and Excavation (CDE), which included dredging, 19% from Commercial and Industrial (CI), with Waste from Households (WfH) and Other accounting for the remainder at 12% and 7%, respectively.  

However, in all but that of WfH has the amount of waste increased, 1.2% since 2016. Moreover, the recovery rate from Construction and Demolition – excluding Excavation – waste has remained largely the same since 2015 when it was 91.5%, to 93.1% in 2018. The statistics also reveal that while 44.6% of WfH was recycled in 2001, the figure was similar in 2015 at 44.5%. Additionally, the amount of biodegradable WfH – at approximately 6m tonnes – has remained largely the same since 2015. Of the 12.7m tonnes of packaging generated by the UK, the combined achieved recycling rate was 63.2%, with metal the most recycled at 76% and plastic and wood the least at approximately 44%.

Recycling and Recovery was the most common final waste treatment type in the UK in 2018, accounting for 108.4 million tonnes (50.4%). Approximately 66% of this is comprised of mineral wastes and soils from the construction, demolition and excavation sector with the remainder being the recycling of glass, plastic, metal, and wood. Landfill is the second most used waste treatment in the UK, with 23.6% (50.8 million tonnes) of waste disposed of at landfill in 2018. Additionally, incineration of waste with energy recovery increased by 18.5% from 2016-2018 and now accounts for a greater tonnage than waste treatment by incineration alone.  

Thus, while there has been some improvement in the management of waste, a lot more needs to be done to achieve Net Zero by 2050. While burning or dumping waste in landfill might deal with the physical problem it does not deal fully with the polluting gases which emanate from these processes. Of course, the reasons waste ends up here is because it’s currently cost-effective on one level, unfortunately, not at the environmental level – because the environmental cost has not yet been priced in to the production and clean disposal of goods.

In a capitalist economy – whether linear or circular – the production of goods and the subsequent recycling or re-purposing of them – has to offer a profit or there will be no incentive to do it. What then are the steps the Government is taking to make a circular economy profitable?


In December 2018, the Government set out its strategy with its ‘Resources and Waste Strategy for England’ Policy Paper. Admitting that its previous policy towards using resources was not working, the 2018 paper updated and enhanced work undertaken in the 2011 Waste Review and the subsequent Waste Prevention Programme 2013 for England – especially in relation to waste crime, packaging waste and plastic pollution.

The ambition of the strategy is to see all plastic packaging placed on the market being recyclable, reusable or compostable by 2025; eliminating food waste to landfill by 2030; eliminate avoidable – that which could have been recycled – plastic waste by the early 2040s, double resource productivity (a measure of the value generated per unit of raw materials) by 2050, and to eliminate all avoidable waste by 2050.

The strategy – in its own words – ‘will deliver this through policies, actions and commitments which adhere to at least one of five strategic principles:

·        To provide the incentives, through regulatory or economic instruments, if necessary and appropriate, and ensure the infrastructure, information and skills are in place, for people to do the right thing;

·        To prevent waste from occurring in the first place, and manage it better when it does;

·        To ensure that those who place on the market products which become waste to take greater responsibility for the costs of disposal – the ‘polluter pays’ principle;

·        To lead by example, both domestically and internationally;

·        To not allow our ambition to be undermined by criminality.’

This policy dovetails with the Government’s '25 Year Environment Plan' – published in January 2018 – to improve the environment within a generation. Its goals and ambitions include reaching mandatory targets for air quality, cleaning up UK waters, ensuring a thriving habitat for plants and wildlife on land and at sea, reduce environmental hazards, using natural resources more sustainably and efficiently, enhancing the beauty of the natural environment, mitigating the effects of climate change, minimising waste, managing exposure to chemicals, and enhancing bio security.  

Additionally, in July 2020 the UK Government began the transposition of the EU’s Circular Economy Package into law which ‘introduces a revised legislative framework, identifying steps for the reduction of waste and establishing an ambitious and credible long-term path for waste management and recycling.’

In August 2023, building on the Resources and Waste Strategy (RWS), the Government published the ‘Waste Prevention Programme for England, Maximising Resources, Minimising Waste.’ The policy paper’s focus is on strategic principle 2 of the RWS, that is, the minimalization of waste and its better management when it does occur.

The paper outlines three approaches to reducing waste: designing it out, systems and services to recycle, re-use and repair, and product-specific datasets (for example, linked to material composition) to facilitate enhanced recycling. The paper ‘calls for action’ on seven sectors ‘based on available data on the amount of waste arisings or known carbon emissions from production of: construction, textiles, furniture, electronics, vehicles, plastic and packaging and food.’

Together with these policies, the Government is also enabling the move to the circular economy with the establishment of new research and partnerships with NGOs. In May 2021, the National Interdisciplinary Circular Economy Research (NICER) Programme was announced to ‘catalyse the UK’s shift to a circular economy.’

The programme brings together the Arts and Humanities Research Council (AHRC), Biotechnology and Biological Sciences Research Council (BBSRC), Economic and Social Research Council (ESRC), Engineering and Physical Sciences Research Council (EPSRC), Natural Environment Research Council (NERC), Innovate UK and runs until 2025.

The Government is also working with NGO, WRAP, (Waste and Resources Action Programme) and the Ellen Macarthur Foundation on several initiatives to support the move to a circular economy and reduce the effect of polluting waste on the environment. Among them is support for the Courtauld Commitment 2030, a voluntary scheme that aims to reduce waste and emissions from food and drink production, and the UK Plastics Pact, which aims to reduce the use of plastics across supply chains.

Business shift

In March 2021, the Government’s net zero plans were given a boost with the announcement that 30 of the UK’s FTSE companies had signed up to the United Nation’s ‘Race to Zero’ campaign, a global alliance of businesses and organisation committed to making their operations Net Zero by 2050.  Among the companies were AstraZeneca, BT Group, Sainsbury’s, and Unilever.  

This was an important step for the country but also for the burgeoning number of green transition companies. With big business now committing to Net Zero in numbers, this provides multiple opportunities for technology companies to help them achieve it. And a small but growing ecosystem of companies and organisations helping to foster the ‘circular economy’ is taking shape.  


In the construction sector, there is the UK Green Building Council (UKGBC), a membership-led industry network aiming to transform the sustainability of the built environment. Its mission is to identify ‘the pathways to propel the sector forward sustainably and driving the solutions to transform our buildings, communities, cities and infrastructure so that people and nature thrive.’

Among other companies helping to reduce waste in the construction industry is Environmate. Its classified marketplace enables surplus and left over building materials to be kept out of the waste stream by finding new owners that create additional value by re-using, re-purposing or up-cycling under-utilised material resources.

According to WRAP, the fashion industry is ranked fourth in Europe in terms of its negative environmental impact.  As well as being an energy-intensive industry, the sector accounts for millions of tonnes of waste a year and is a major contributor to the problem of plastics in the ocean through the washing of synthetic textiles like polyester, nylon, and acrylic.  

One British start-up, Matter Industries, has developed a simple filter system, Gulp, which attaches to a washing machine and collects the microplastics as the machine drains.  Moreover, it also neatly encapsulates the circular economy model. ‘Gulp is a sustainable, scalable piece of technology that empowers people to become part of the solution and make a real difference. We are building the future we want to see, a UK manufactured product, a full circular model for the material captured, spare parts available and end of life recycling. This product will be the pinnacle of sustainable design’, says Adam Root, Founder and CEO of Matter.

Another company seeking to address a particular problem of the textiles industry – chemical and water usage in the dyeing process – is Dutch company DyeCoo. It uses reclaimed C02 as the dyeing medium in a closed loop process. The technique uses neither water nor chemicals leading to lower costs and higher efficiencies.  

With regards to furniture, one of the UK’s largest retailers, IKEA, has numerous initiatives in place to facilitate a more circular economy, among them: Buyback and Resell, Re-Shop and Re-use, Take Back and a Recycling or Disposal programme by which the company will dispose of the item according to their zero waste to landfill policy.  

Unwanted electricals are one of the UK’s fastest growing waste streams and, as such, provide good opportunities for green transition organisations and businesses in this area. In 2020, Material Focus set up Recycle your Electricals – a UK-wide campaign that facilitates the recycling of unwanted electricals by putting owners in touch with their nearest recyclers. 

But if one was to look for a company blazing the trail for the circular economy then look no further than Apple, one of the biggest producers of electronic products on the planet but one which is also taking its sustainability seriously. In 2020, Apple made a commitment that its entire supply chain and product base would be 100% carbon neutral by 2030. To achieve this, it has invested in new robot technology which can disassemble up to 1.2million phones per year and help recover an increasing amount of materials for recycling. In 2021, nearly 20% of material used in Apple products was recycled, helping to achieve its closed-loop goal.  

The Plastic problem

Synthetic plastics – those derived from crude oil, natural gas, and coal – are not biodegradable and most waste plastic is either incinerated or dumped into landfill sites. When burned – though increasingly used to generate electricity – this waste plastic releases tonnes of C02 into the atmosphere.

According to Greenpeace, the UK throws away around 100 billion pieces of plastic packaging a year of which half is incinerated. It has estimated that this releases approximately 750,000 tonnes of C02 into the atmosphere. Furthermore, the environmental impact of sending plastic to landfill is not a better option: Some plastics can take up to 1000 years to degrade and this ‘degradation’ does not mean that the plastic disappears, it simply degrades into microplastics that leech into soils and water courses and continues to pollute the environment.

Clearly, plastic pollution and waste is a problem looking for a solution. And in the UK, this partly came in October 2023 in the form of a new law banning the use of single-use plastics. While a welcome addition to the plastic problem, the law exempted single use plates, bowls and trays if supplied to another business or the items constitute part of the packaging, for example, a plastic ready meal tray.  

The solution to the problem of plastic is to keep it going round the circular economy for as long as possible, to find alternative materials as a substitute, and to find a method of disposing of un-recyclable plastic in an environmentally friendly way.  One company attempting to do this is Powerhouse Energy. It is developing a solution that converts non-recyclable plastics into a syngas, which can be used as a chemical precursor for industry, burned to generate electrical power or from which hydrogen is extracted. The hydrogen purity level, at 99.999%, means that it can then be used as fuel for road transport. The company’s vision is to place its technology at the heart of manufacturing clusters and use their waste plastics to provide those same businesses with low-cost energy and hydrogen fuel.  

At the World Economic Forum in 2018, eleven of the world's leading companies announced they would work towards using 100 percent reusable, recyclable, or compostable packaging by 2025 or earlier. Among them was Unilever which, by this date, has pledged to halve the amount of virgin plastic it uses in its packaging, that 100% of its packaging is recyclable, reusable or compostable, and increase the amount of recycled plastic in its packaging to at least 25%.

Paradigm shift?

While it may be too early to talk about a paradigm shift in the ‘shape’ of global economies, moves are clearly afoot to transition to a more circular economy model that addresses the environmental problem of waste and overproduction. And this is creating enormous opportunities for innovative businesses to help the industrial behemoths and others make this change.

Whether it is dealing with waste, designing it out, the development of new packaging materials or recycling and repurposing, the world is slowly waking up to the benefits – and practicality – of sustainability. And a circular economy where outputs in equals outputs out and then returned in a closed loop ad infinitum is one way industry can achieve this. But for it to work, the environmental costs of producing goods and their end-of-life-recovery must be priced in to signal the new direction of travel.

Of course, sustainable business practices are more expensive than others – otherwise they would already be the default model – and this poses significant challenges for policy makers as they try to nudge the economy in this new direction. Such questions, however, are beyond the remit of this article which is to provide a general overview of the circular economy model, its development and business opportunities arising. Clearly, many questions remain and possibly to answers that have yet to be asked. Therefore, we’d like your opinions and insight – via the GTT Forum – into a subject to which we have barely scratched the surface.

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