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Chapter 0

ERS317 Chapter Notes - Chapter 0: Arbitrage, Resource Depletion, Circular Economy

Environment and Resource Studies
Course Code
John Jackson

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Week One - Towards the Circular Economy
- In the face of sharp volatility increases across the global economy and
proliferating signs of resource depletion, the call for a new economic mode is
getting louder
- Businesses have started to explore ways to reuse products or their
components and restore more of their materials, energy & labor inputs
- Some people believe the time is right to take this concept of a circular
economy one step further
The Limits of Linear Consumption
- Our industrial economy has hardly moved beyond one fundamental
characteristic established in the early days of industrialization
- Companies harvest/extract materials and ten use them to manufacture a
products, and sell the product to a consumer, who then discards it when it no
longer serves the purpose it was originally intended to.
- In 2010, 65 billion tonnes of raw material entered the economic system, and
this is extected to grow to 82 billion tonnes in 2020.
- Many companies have recently noticed this linear system incrases their
exposure to risks
o Mainly higher resource prices and supply distributions
From Linear to Circular Accelerating a Proven Concept
- a circular economy is an industrial system that is restorative or regenerative
by intention and design
- It replaces the end of life concept with restoration, shifts towards renewable
energy, elimating the use of toxins, and aiming for the elimination of wate
through the superior design of materials, products, systems, and business
- Based on a few basic principals:
o At its core it aims to design out waste
Waste does not exist, products are designed and optimized for
a cycle of disassembly and reuse
o Consumables in the circular economy are largely made of biological
ingredients that are at least non-toxic and possibly beneficial
They can be safely returned to the biosphere
- These principals all drive out fore clear-cut sources of value creation that
offer arbitrage opportunities in comparison with linear product design and
materials usage
o Power of the inner circle
Minimizing comparative material usage
The tighter the circle, the better
o Power of circling longer
Maximizing the number of consecutive cycles and/or the time
in each cycle
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