On the Relationship between Circular and Innovation Approach to Economy

Abstract

The first and most important target of the industrial world is to offer products that appeal to customers’ demands (affordable prices), while at the same time, respect the global effort of CO2 emissions reductions, which is required under strict emissions rules. There is, however, an apparent contradiction between the two concepts; productivity and sustainability, leading to two strategies—innovation economy and circular economy, respectively. To this end, this work aims, through modeling the long-term environmental impact of producing new goods in short terms (innovation economy) and impact of rebuying, repairing and reusing products for extended use (circular economy), to study the relationship between the two economies. For this purpose, the terms of innovation and circular economy are introduced and described, in order to define the environmental impact during the lifecycle of a product. Two products are assessed for this study—a well-known, medium price vehicle, as well as an expensive mobile phone with several generations. The cost of purchase and the recurring costs are used as indicators of environmental impact, instead of calculating the impact directly for the production phase, due to the enormous size of the production data that are desired. The results, despite being indicative of the modelling complexity, can still be used to pave the way towards a modelling framework, proving, at the same time, that innovation and circular economy are not contradictive concepts.