What is a circular economy?
The circular economy is an entire shift in how we source, make, buy, and use things.
It is a system where we keep the resources and materials we have in circulation for as long as possible:
- New products are designed for quality and longevity.
- Recycled materials are used instead of new resources.
- Products can be repaired, disassembled, and recycled, ready to be made into something new, again and again.
- We look for ways to meet our needs with services instead of products or things.
The whole supply chain is committed to eliminating waste, reducing emissions and decoupling economic growth from an increased use of finite resources.
Moving from a linear to a circular economy
In a linear economy, we take resources from the earth and use them to make things. When those things break or lose their value, we throw them out.
Moving toward a circular economy requires us to do things like:
- rethink how we can make product use more intensive (for example, by sharing products).
- reuse discarded products that are still in good condition and fulfill their original function.
- recycle by processing materials to obtain the same (high grade) or lower (low grade) quality.
- remanufacture by using parts of the discarded product in a new product with a different function.
Examples of how Victorians are achieving circularity
- Rethink: Sunshine Repair Café is changing consumer culture one conversation at a time, and building skills that empower everyone to contribute to the circular economy.
- Reuse: The Salvation Army has been operating its second-hand stores for over a century.
- Recycle: The Jesuit Social Services’ Ecological Justice Hub partners with Precious Plastics Melbourne to recycle plastic bottle lids – which are not currently recycled – while providing education and job-readiness programs for people with disabilities and the long-term unemployed.
- Remanufacture: A Sustainability Victoria-funded project has transformed material from end-of-life tyres into speed humps without compromising on performance.
Why we need a circular economy
In Victoria, more than a third (36%) of emissions are generated through the extraction and use of products and materials. Even if we were to transition to 100% renewable energy, it would not be enough to reach net-zero.
The single biggest solution to address material-based emissions is the transition from a linear ‘take-make-waste’ system to a circular economy.
Our current linear economy represents a market failure that assumes an infinite supply of natural resources and no consequences for wasting them. Beyond emissions, this way of working is responsible for:
- 90% of global biodiversity loss
- 60% of global heating impacts
- 40% of air pollution.
In a circular economy, materials are used efficiently in a closed-loop system. Throughout a product’s lifecycle – from design and manufacture, through to use and end‑of‑life management – this reduces waste, material use and environmental impacts.
A circular economy adheres to 3 principles:
- Circulate products and materials at their highest value.
- Eliminate waste and pollution.
- Regenerate natural systems.
The value of a circular economy
Shifting to a circular system means reducing the pressure on our environment and our waste systems. It has the potential to generate jobs, attract investment, and grow income for Victoria.
Modelling shows that a circular economy can increase our GDP by $26 billion in the next 10 years, resulting in 11% more disposable income for consumers by 2030, and adding an additional 150,000 new jobs to the Australian market by 2048.
A circular transition would fulfill 30% of the progress needed to stop and even improve upon biodiversity loss, reduce material scarcity, and abate 23% of Australian GHG emissions.