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Why Plastic Circular Economy Makes Sense?

Updated: May 18, 2023

Since the early 1950s, a study has estimated that more than 8.3 billion tonnes of plastic have been produced. The rise in popularity of single-use plastics that wraps our food, bottle water, carry our coffee and made into straws has become a driving force for plastic production coupled with a hard push from advertisers convincing us that "new is always better". Plastic has a vital role to play for businesses, such as protecting and preserving the content it wraps and holds, so that the content can be distributed and transported.

However, 95% of the plastic packaging material that is valued at $80 to $120 billion annually is lost to the economy, as it ends up in landfills, dumps and the natural environment. It is estimated that 8 million tonnes of plastic are leaking into oceans every year – the equivalent of dumping the contents of one rubbish truck every minute.

With only around 14% of plastic being recycled, a rethink on how to manage plastic waste and packaging is desperately needed. This is where the principles of circular economy come in to replace the linear economy, also known as the take-make-dispose model.

Importance of The Circular Economy Concept

Before we dive deep into the circular economy, here are some numbers on the economic damages that plastic waste can bring: From Valuing Plastics, at least USD 13 billion annual damage of plastics to marine ecosystems; from Asia-Pacific Economic Cooperation (APEC), estimates USD 1.3 billion damage cost of ocean plastics to the tourism, fishing and shipping industries in that region; and from European Commission, potential costs for coastal and beach cleaning could reach EUR 630 million (USD 695 million) per year. Plastic waste also impacts the food chain and ultimately human health too.

The new plastic circular economy is designed to use the reduce-reuse-recycle approach. What this means is that the key actors within the entire plastic value chain, will create an effective after-use for plastics to eliminate unnecessary plastic consumption and recirculate plastic waste. This has enormous implications for the economy and environment.

The focus will be on designing products that can be reused, biodegraded or recycled; and then looking at how the product can be collected for recycle and reuse. When this closed-loop system is achieved, this can drastically reduce the leakage of plastic into the natural environment and elsewhere, and be able to effectively decouple from the fossil feedstock.

Economic Opportunities in the Circular Model

Much of this new plastic circular economy concept was formulated by the Ellen MacArthur Foundation, a United Kingdom-based charitable organisation that focuses on solving environmental issues through the circular model. The foundation is working with business, government and academia to make the shift. In 2016 and 2017, their New Plastics Economy reports has garnered worldwide attention, not only shifting the plastic debate but also mobilising a global commitment with over 450 signatories to start building a circular economy for plastic. This included companies like The Coca-Cola Company, Unilever and Nestlé that represents 20% of all plastic packaging produced globally.

It is apparent in their reports, that three points stood out: without fundamental redesign and innovation, about 30% of plastic packaging will never be reused or recycled; for at least 20% of plastic packaging (by weight) that gets reused unlocks an economically attractive opportunity of USD 9 billion; and with concerted efforts on design and after-use systems, recycling would be economically attractive for the remaining 50% of plastic packaging.

Whilst virgin plastic may be argued for its affordability, Ellen MacArthur foundation with other partners, has demonstrated that the shift to the circular model could generate as much as “USD 706 billion economic opportunity, of which a significant proportion is attributable to packaging”. The report stated by "radically improving recycling economics, quality and uptake. Coordinated and compounding action and innovation across the global value chain are needed to capture the potential."

Ogoori’s Plastic Capture and Storage

Ogoori encapsulates the spirit of what Ellen MacArthur Foundation started by creating a value chain here in Norway. Ogoori is also based on the principles of the circular economy and call it PCS, “Plastic Capture and Storage,” a nod to CCS “Carbon Capture and Storage” and a hope that PCS will develop faster than that technology.

Ogoori is collaborating with numerous partners throughout the whole value chain to ensure that the plastics from marine litter is recycled, sorted and reused in products, such as high-end furniture. To make sure that the product does not enter into nature ever again, Ogoori has partnered up with Empower to use blockchain technology to track and hold everyone in the value chain accountable for where the plastic ends up.

Business Models That Works

Ogoori was established by circular design company, Ope; furniture company, Vestre; and Environmentalist Rune Gaasø in 2020. Both Ope and Vestre has appeared in research papers for CIRCit research project to develop tools and insights on building sustainable business models for the circular economy.

Researcher Marina de Pádua Pieroni at Technical University of Denmark, has published a few scientific papers on circular business models, using Ope and Vestre as case studies. Pieroni told us that there are more than 92 methods and tools being created by researchers and companies to design their new business models to accelerate the implementation of circular economy and sustainability. However, "some key aspects are still lacking attention from both researchers and companies to make the circular economy become a reality and happen.”

Pieroni said that Ogoori in her view, represents companies that are experimenting, testing and implementing the circular business model, and an example of good practice by showing collaborative efforts between Ope, Vestre and many other partners.

On Ope as a case study that uses office/workspaces items as service, she said “The simulations of the models demonstrated potential for it to achieve at least the same profitability as the traditional sales model in the long-term. Moreover, a reduction of 20-45% resource consumption was estimated as possible. However, a key challenge identified for such models is that they are usually ‘niche solutions.’ Therefore, it is important to identify (and get right) the particular needs, customer segments and geographical locations that are more likely to accept them.”

The future for a new plastic circular economy is made possible by concerted efforts of all key actors in the plastic value chain, money can be saved and profits can be found. It makes sense to shift to a circular economy to beat the plastic pollution. Moreover, a better outcome for the environment, economy and global public health.

At the heart of the Circular Economy is the challenge of tackling economic growth’s close correlation to resource intensity. Circular business models are currently our best bet at achieving a decoupling of these two parameters, which has not been possible thus far.

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