The Circular Economy as the New Normal

The Circular Economy And The Status Quo

In the meantime we have seen many pilots, a growing number of start-ups, more and more attempts by business to develop circular alternatives for their existing product-market combinations, and new coalitions of parties with new circular innovations. The government plays a clear role on the national and local levels in pushing the circular economy forward. 

Yet the logical and inevitable circular economy has not shown an exponential growth. Not because the concept is incorrect, but because our current linear system is too much of a steady status quo that has been optimized in the course of decades and therefore still appears to be more cost-efficient than circular concepts. The key is that circular innovations lack the same scale or/and have to deal with barriers that come with every paradigm shift. 

These are the typical first mover 'costs' and weigh heavily on a relatively small group of pioneers, barriers that include necessary alterations in laws and regulations, new risk assessment within financial institutions, unproven business models, and new ways of collaboration. They can be overcome in pilots and small-scale trajectories, but are a real roadblock once the projects are upscaled - a classic 'Catch 22'.

The success of the transition towards a circular economy in this phase will depend heavily on whether there is sufficient demand from the market. Demand gives air to the market by enabling entrepreneurs to raise the bar when it comes to innovation. It gives support and evidence that it can be done and with the right scale, and it becomes more feasible to get a return on the investment. The logic behind the circular economy leads to the hypothesis that a positive business case can be found in each sector, but the 'switching costs' are still too high for most companies. In other words, reality is tough. Governments on the local, national and European level play a crucial role in this development stage. They have the ability to be a launch customer and they are in prime position to change the rules of the game in favor of the circular economy.