The importance of the Circular Economy

In recent years, governments, recycling activists and the waste management industry have been heavily focused on the Circular Economy when creating policies and reports.  The Australian government’s new National Waste Policy is dedicated to ensuring Australia achieve a circular economy.[1]  The term is also used throughout the media; however, many are unsure exactly what it means and how it impacts our national and global economies. 

As a planet, we are now producing nearly 300 million tons of plastic every year, half of which is for single use.[2]  Our finite resources are diminishing and, at the same time, as the global population grows, we are requiring more resources than ever before.

It’s time to get serious about the circular economy.


What is the circular economy?

The Ellen Macarthur Foundation, developed in 2010 to accelerate the planet’s transition from a linear economy to a circular economy, explains the circular economy as[3]:

Looking beyond the current take-make-waste extractive industrial model, a circular economy aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources and designing waste out of the system. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural, and social capital. It is based on three principles:

  • Design out waste and pollution
  • Keep products and materials in use
  • Regenerate natural systems

Circular Economy Diagram.png

Circular Economy Australia defines the concept as an alternative model that anticipates and designs for resources to be either safely returned to nature or back into systems where they can be reused or renewed.[4]

Linear Economy vs Circular Economy

Currently, our global economy is built on the concept of a linear economy.  This model is simple and described as; 1. Extract, 2. Manufacture, 3. Distribute, 4. Use, 5. Dispose.

 Liner Model.png

Over the past few decades, we have rapidly transitioned to a disposable society. Globally we continue to generate waste at an unmanageable rate.  The authors of the paper “Production, use, and fate of all plastics ever made”[5] highlight that 8.3 billion metric tonnes of plastic have been produced in the 65 years since the beginning of the 1950s – the decade in which mass production of plastics began. About 60% of that, or 4.9 billion tonnes, has already ended up in landfills or polluting the environment.

Plastic Production.png

Whilst the aforementioned paper also highlights the increase in recycling and waste to energy incineration, the facts show a vast majority is discarded in either landfills or oceans.

In Australia, our recycling system is more focused on a Reuse Economy. A reuse economy is an improvement on the linear economy. Old products are used to make newer products. For example, old paper is reused to make new paper. Although raw materials are still not reused and non-recyclable waste is also produced.[6]

Liner to Circular Economy.jpg 

It is clear to see from the research that recycling is a core pillar of a circular economy.  This will reduce the overall amount of raw material production and increase recycled material productions.  However, there are two key issues to address to ensure success.

Importance of recycling and demand for recycled products

The first is to improve global recycling rates. Facilitating higher waste collection and recycling rates would allow waste plastics to be captured before they begin creating problems in the natural environment.[7] 

There are numerous studies to showcase how container deposit schemes can support recycling rates.[8] However, in all cases, even successful container deposit refund programs can be improved via new recycling technologies.Container Deposit Systems Advertiser.png

Container Deposit Systems is focused on increasing recycling rates in Australia by making it easier for Australians to recycle containers. In a recent interview with the Advertiser, Container Deposit Systems Chairman Mr Duncanson said, “We have invested close to $5 million in research and development raised entirely through private South Australian capital and there is more innovation in the pipeline.  There are two things we have achieved with this machine; one is for people to be able to return any deposit container in any condition and the other is to automate the cash payouts to customers and the overall depot cash management.’’

 The second issue to address is how to increase the demand for recycled products.  In the OECD 2018 Policy Paper: Improving Plastics Management: Trends, policy responses, and the role of international co-operation and trade, improving demand for recycled plastics is addressed.  The paper suggests that Governments of G7 countries could:

  • Tax the use of virgin plastics or differentiated value-added taxes for recycled plastics or plastic products;
  • Reform support for fossil fuel production and consumption;
  • Introduce recycled content standards, targeting public procurement requirements, or recycled content labelling; and
  • Create consumer education and awareness campaigns (concerning the environmental benefits of recycled plastics) in order to stimulate demand for products containing recycled plastics[9]

Whilst the OECD report is focused on government actions, a combination of increased recycling rates and increased demand for recycled products will ultimately drive industry investment.

How a Circular Economy can support Australia

A circular economy has a vast range of benefits. The obvious benefits relate to the environment including reduced dependence on importation of raw materials, avoidance of environmental damage caused by resource extraction and less pollution entering the earth’s life support systems.[10]  However, there is also a range of economic benefits of a circular economy which could support all Australians. Container Deposit Systems has highlighted the top three economic benefits below:

  1. Creation of new green industries and jobs: higher recycling rates, to the extent that they are driven by the emergence of an economically sustainable recycled plastics industry, are an opportunity to become a source of long-term job creation.[11] In addition to recycling rates, with increased demand for recycled goods, it is forecast that private investment in green industries will dramatically increase.  This will lead to more jobs and support workers transition through the 4th industrial revolution.
  2. Increase in national productivity: In 2015, research company McKinsey demonstrated that reusing natural capital as efficiently as possible could boost Europe’s resource productivity by 3 per cent by 2030, generating cost savings of €600 billion a year and €1.8 trillion more in other economic benefits.[12] The company highlighted that whilst larger economies can benefit, individual companies will also benefit via implementing circular economy principles into internal systems.
  3. Reduction in manufacturing costs: A move towards a circular economy can help companies reduce input costs and stabilise their supply chains over the long term. This could benefit manufactures for example by allowing them local access to the recycled materials needed to manufacture their goods.[13] It could further reduce transportation costs and manufacturing timeframes.

Whilst Container Deposit Systems is confident Australia will continue to move towards the circular economy direction, continued investment from both governments and industry is needed to ensure success. 


About Container Deposit Systems

Container Deposit Systems was formed with a vision to oversee the implementation of improved operational practices in recycling facilities.  The company offers a range of services to recycling depot facilities to drive productivity improvements and transition traditional recycling facilities into modern technically advanced operators.

The company achieve this through patented technologies which deliver manufacturing automation to auto-sort materials via a highly sensitive multi-sensor integration.  Systems integrations enable facilities to further gain efficiencies through workflows, materials handling, logistic processes, facility layout and design, customer interaction and data acquisition and management. 

Container Deposit Systems technologies are designed and manufactured in Australia with local partners Sage Automation and Macweld Engineering.

For more information, please contact us directly.