Circular Economy: Illusion or First Step towards a Sustainable Economy: A Physico-Economic Perspective

Abstract

“A circular economy is one that is regenerative by design and aims to keep products, components, and materials at their highest utility and value at all times, distinguishing between technical and biological cycles. This new economic model seeks to ultimately decouple global economic development from finite resource consumption”, states the widely used definition of the Ellen MacArthur Foundation. This definition conveys two messages. First, it acknowledges that economic activities need natural inputs (energy and material) and generate outputs in the form of waste as well as emissions. Second, it embodies the promise that, through technological innovations, human ingenuity and the market, a full decoupling of the economy from nature can be reached. Obviously both messages are not consistent with each other. Analyzing these issues through the lens of a transdisciplinary approach, which combines insight from thermodynamics with conventional economic theory, is the purpose of this paper. By using such physico-economic perspective, it is argued that not any kind of a circular economy is sustainable. Therefore, indicators are required through which it can be assured that a particular fashion of a circular economy reduces both environmental and social harm.