GaBi Solutions

Circular Economy

What is Circular Economy?

Circular economy refers to a model in which economic growth does not go hand in hand with the exploitation and consumption of natural, non-renewable resources.

The aim of a circular economy is the resource-efficient and sustainable use of natural resources, their reuse and recycling within a circulatory system and the prevention of waste. The implementation of a circular economy should not be in conflict with economic interests.

The latter are served by the fact that in the system of circular economy companies generate an additional value from the materials used and the reduction of procurement risks in the form of material costs, price volatilities and supply bottlenecks.

Unlike the linear economy, ecology and economy are not in competition with each other in the circular economy.

Linear Economy and Circular Economy

"Take - Make - Throw away" vs. "Reusing, Repairing, Recycling". Two conflicting concepts with different impacts on the consumption of resources and pressures on the environment.

Linear Economy

In the linear economy resources and raw materials are extracted, processed and usually used for a specific purpose. At the end of life the products are disposed of in the landfill or thermally recycled. Linear economy is therefore often referred to as a "disposable economy".

Circular Economy

circularity flows in circular economy

In a circular economy resources are kept in a circulatory system over the longest possible use phase. The materials are often used for several purposes and returned again and again in the recycling cycle. The ecological advantage of the circular economy is that it produces less waste and minimizes the extraction of fossil resources.

Video about Circular Economy (by Ellen MacArthur Foundation)

How to measure the level of 'circular economy'?

"Copyright © Ellen MacArthur Foundation [2015] and Granta Design."

The circularity - also called "material circularity" - is an expression of the compatibility of the model under investigation with the principle of a circular economy.

But how is it possible to scientifically assess to what extent and how effectively companies or products correspond to the circular economy and what progress they make in their development away from the linear economic model towards a circular economy?

Valid information was hard to come by in the past, and the statements in this regard are rather vague and non-binding.

In the "Circularity Indicators" project, the EllenMacArthur Foundation and Granta Design have developed a methodology for capturing the circularity of products and companies based on facts and numbers.

Material Cricularity Indicator (MCI)

The Material Circularity Indicator (MCI) represents the degree of the material flow's circulatory on a scale of 0 to 1. The higher the score, the more recyclable or circular the product.

The MCI can be a decision-making tool for product designers and buyers to select materials, use it for reporting or to evaluate companies. The assumption here is that the circularity of a company is made up of the individual material circularities of its products.

MCI = 1

To get a result of 1, all the raw materials used would have to come from reused components or recycled materials, without any loss in recycling (100% recycling efficiency). Any waste generated during the production and end of life of the product would also have to be reused or recycled without any loss ("zero waste").

MCI = 0,1

A product with completely linear material flows, where all raw materials come from virgin material and no waste is reused or recycled at all, is valued at 0.1. To achieve a value below 0.1, the benefit of the product would have to be lower than that of an average industrial product (i.e., the product would have to have a shorter life or lower intensity of use). A product with completely linear material flows but with a higher utility than an average industrial product would have an MCI > 0.1.

LCA and MCI measuring product sustainability

Companies that want to improve the sustainability of their products or, at first, decide on their current status often use Life Cycle Assessments (LCA). Here, all incoming and outgoing material and energy flows of a product are recorded over its entire life cycle and on this basis the resulting possible environmental effects are derived.
In order to be able to calculate the results of LCAs, it is common to use dedicated software tools such as our
GaBi Software.

These allow the user to construct detailed models of the life cycle of the product systems they want to examine. There is a great deal of overlap in the data requirements for developing LCA models and for calculating the MCI. Both require information on mass flows of raw materials and wastes, on whether raw materials are obtained from virgin, recycled or reused sources and on how waste are treated. 

Taking advantage of this commonality of data, thinkstep has developed the GaBi Circularity Toolkit. This can be applied to GaBi LCA models and requires making some minor adjustments that then allows the MCI to be calculated alongside conventional LCA results. The GaBi Circularity Toolkit lets you apply the power of GaBi’s scenario analysis features to quickly and conveniently calculate MCI results of different alternatives. This is much faster and more reliable than attempting to calculate the MCI in a spreadsheet. In this form it is unique on the market.

Related Topics and Links:

Circular Economy Definition

A circular economy can be defined as a largely self-contained circulatory system in which all materials and energy used are not disposed of or emitted after use, but are kept in circulation through constant recycling and reuse.

GaBi Circularity Toolkit

Closed Cycle and Waste Management Act

The German Law on Circular Economy (KrWG) ran before 2012 under the name "Kreislaufwirtschafts- und Abfallgesetz (KrW- / AbfG)". It aims to protect natural resources by promoting a circular economy from cradle to cradle and environmentally sound management of waste. Waste should primarily be avoided (zero waste), reused or recycled. The worst option is disposal. The KrWG is part of the German waste legislation.

EU Action Plan for the Circular Economy

In 2015, the European Commission adopted the "Circular Economy Action Plan" with the aim of creating a sustainable, resource-efficient, cycle-oriented economy that will provide Europe with competitive advantages over the long term. The action plan includes a catalog of measures amongst other things for the areas of production (e.g. eco-design), consumption (e.g. avoidance of food wastage), and disposal (e.g. recyclability).

EU Action Plan for the Circular Economy

Cradle to Cradle (C2C)

Cradle-to-Cradle® describes a concept developed by Michael Braungart and William McDonough for the 'circular design' of products. It distinguishes between a technosphere in which non-organic materials, e.g. metals can be used again and again, and a biosphere, in which the organic waste can be dispensed and there again becomes part of the natural cycle. In this context, one speaks of "eco-effectiveness".

More about Cradle-to-Cradle

Ellen MacArthur Foundation

"Copyright © Ellen MacArthur Foundation [2015] and Granta Design."

In her 2005 circumnavigation of the world Ellen MacArthur became aware of the urgency of changing the way natural resources are handled. In the following years she talked to experts and industry representatives from different countries and industries about the use of raw materials.

Ellen MacArthur Foundation
In 2010, Ellen MacArthur founded the Ellen MacArthur Foundation with the goal of advancing in society, politics and industry the transition from a consumption- and disposal-oriented linear economy to a resource-efficient circular economy.

Since then, many global companies have partnered with the Ellen MacArthur Foundation. The charitable foundation is also active in an advisory capacity and supports e.g. the European Commission in decision-making and legislative initiatives - such as the creation of the "European Resource Efficiency Platform (EREP)".

Material Circularity Indicator
Together with Granta Design, the Ellen MacArthur Foundation has launched the project "Circularity Indicators". The aim of the project was the development of a measuring methodology for the quantitative assessment of recycling economies. Enterprises should have access to numerical information about their circularity. The result was the Material Circularity Indicator (MCI).

More about the MCI methodology