1. Industry Chain Analysis of Circular Economy Market
It begins with sourcing ‘Raw Materials’, emphasizing sustainable sourcing. ‘Intermediate Goods’ are then processed for manufacturing, where ‘Operations’ and ‘Procurement’ ensure efficient use of resources. ‘Manufacturing’ is central, focusing on waste minimization and material reuse. ‘Marketing & Sales’ promote products designed for longevity and recyclability, supported by ‘Human Resource Management’. ‘After Sales Service’ extends product life cycles through maintenance and recycling, facilitated by ‘Service’ and ‘Firm Infrastructure’. The underlying support from ‘Inbound Logistics’, ‘Outbound Logistics’, ‘Marketing & Sales’, and ‘Technology’, all tied together with ‘Firm Infrastructure’, ‘Human Resource Management’, and ‘Procurement’, highlights the comprehensive approach needed for a sustainable circular business model.
2. Downstream Buyers of Circular Economy Market Analysis
The downstream buyers of circular economy market include Saudi Aramco, China Petroleum & Chemical Corporation, Volkswagen AG, General Motors, Toyota Motor Corp, TechnipFMC, and Bechtel.
Table Downstream Buyers
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Downstream Buyers |
Contact Information |
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Saudi Aramco | Web: www.saudiaramco.com Tel: 966 13 872 0115 Add: P.O. Box 5000, Dhahran 31311, Saudi Arabia |
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China Petroleum & Chemical Corporation | Web: www.sinopecgroup.com Tel: 8610 – 59960114 Add: 22 Chaoyangmen North Street, Chaoyang District Beijing,China |
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Volkswagen AG | Web: www.volkswagenag.com Tel: 49-5361-9-0 Add: Berliner Ring 2 Wolfsburg, 38440 Germany |
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General Motors | Web: www.gm.com Tel: 1-313-667-1500 Add: 300 Renaissance Center Detroit, MI 48243-3000 United States |
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Toyota Motor Corp | Tel: 81-565-28-2121 Add: 1 Toyotacho Toyota, 471-8571 Japan |
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TechnipFMC | Web: www.technipfmc.com Tel: 44 (0) 203 429 3950 Add: One St.Paul’s Churchyard, London EC4M 8AP |
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Bechtel | Web: www.bechtel.com Tel: 1 571 392 6300 Add: 12011 Sunset Hills Road, Reston, VA, 20190-5918 USA |
3. Circular Economy Market Drivers
‘Circular economy can protect the environment’
Environment is generally defined as the circumstances or conditions in which people, animals, or plants live or function. Environmental problems are the harmful effects of human activities on the environment. These include pollution, overpopulation, waste disposal, climate change, global warming, greenhouse effect, etc. Environmental problems are warnings of impending disaster. If these problems are not controlled, there will soon be no life on Earth. A circular economy entails markets that motivate the reuse of products rather than scrapping them and removing unique resources. In such an economy, all forms of waste, including scrap metal, clothes, and obsolete electronics, are returned to the economy or used more efficiently. Reusing and recycling products will slow the use of natural resources, reduce damage to landscapes and habitats, and help limit the loss of biodiversity. Another benefit of the circular economy is the reduction of total annual greenhouse gas emissions. According to the European Environment Agency, industrial processes and product use account for 9.10% of EU greenhouse gas emissions, while waste management accounts for 3.32%. And a study by the Ellen MacArthur Foundation concluded that a circular economy path could cut carbon dioxide emissions in half by 2030. This shows that circular economy can effectively protect the environment and reduce environmental problems. Therefore, the growing environmental problems have attracted people’s attention, and the circular economy has the effect of protecting the environment, which is promoting the development of the circular economy market.
‘Reduce reliance on raw materials’
According to Statista, the world’s population has grown rapidly over the past 200 years. At the beginning of the 19th century, there were only about 1 billion people on Earth; by 2022, the total population will reach 8 billion. Since 1975, Earth’s population has nearly doubled. Furthermore, the population is expected to continue to increase in the coming decades, reaching over 10 billion by 2060, before leveling off in the second half of the 21st century. Currently, the world’s population is growing, and so is the demand for raw materials. However, the supply of key raw materials is limited. In the case of the European Union, for example, limited supplies mean that some EU countries are dependent on other countries for raw materials. According to Eurostat, about half of the raw materials consumed in the EU are imported. Total trade in raw materials (imports plus exports) between the EU and the rest of the world has almost tripled since 2002, with exports growing faster than imports. Regardless, the EU still imports more than it exports. In 2021, this resulted in a trade deficit of €35.5 billion. Recycling raw materials mitigates supply-related risks such as price volatility, availability and import dependence. This applies in particular to key raw materials needed to produce technologies that are crucial to meeting climate goals, such as batteries and electric engines. Therefore, the circular economy can reduce companies’ dependence on raw materials while mitigating supply-related risks, which promotes the market development of the circular economy.
4. Circular Economy Market Restraints and Challenges
‘Investment costs are high’
Full implementation of programs that adopt circular economy practices requires significant upfront investment, as there may be initial costs associated with adopting circular economy practices when companies invest in new technologies, redesign processes, or redesign products. And the high initial investment costs in infrastructure and technology may prevent some companies from switching to circular economy practices. On the one hand, smaller industry stakeholders as well as academic stakeholders do not have the financial resources to pay for this investment. On the other hand, larger industry stakeholders consider the risk too great and are not prepared to raise capital and provide the necessary infrastructure and physical space, given the lack of a solid business case in the market. This results in no stakeholder being willing to bear the initial investment cost. Therefore, high investment costs hinder the development of the circular economy market.
‘Limited consumer awareness’
As one of the core concepts of circular economy, reuse has not yet been applied in many industries. For example, in a circular economy in industries such as fashion/textiles, consumers are still unsure about the ownership of clothes and are reluctant to reuse them. Conventional wisdom that old materials are “dirty” has a greater impact on the circular economy than ever before. With the rise of the new media industry, the textile and fashion industries have seen tremendous growth. But there is still no proper education and awareness about the reusability of clothes. The lack of a correct understanding of the circular economy among consumers leads to their resistance to change, which is not conducive to the development of the circular economy market..
5. Circular Economy Market Opportunities
‘Enterprise innovative technologies, materials and business models’
The circular economy industry continues to innovate in every aspect, from products to processes. That means paper bottles, cellulose building materials and 100% recycled cardboard boxes; factories running on solar power and putting unused energy back into the grid; and new recycling technologies like Georgia-Pacific’s Juno ®, Juno ® is a breakthrough waste recovery technology that can process waste and recover and sanitize valuable raw materials. Juno ® is proven to recover up to 90% of materials it processes, diverting them from landfills and incinerators. These materials – things like paper fiber, food, plastics, and metals – are then circulated back into the economy for reuse as raw materials. Innovation also plays a key role in the market as companies develop creative technologies, materials and business models to enable the transition to circularity. Therefore, companies innovating recycling technologies, materials and business models will ultimately help expand the size of the circular economy market.
‘Government policy support’
Countries have introduced policies that are conducive to the development of the circular economy market, as follows:
China’s National Development and Reform Commission released the “14th Five-Year Plan” for the development of circular economy on July 1, 2021. The main goal of the “14th Five-Year Plan for Circular Economy Development” is to fully implement circular production methods and green production by 2025. Design and cleaner production have been widely promoted, the ability to comprehensively utilize resources has been significantly improved, and a resource recycling industrial system has been basically established.
The U.S. EPA published the National Recycling Strategy: Part One of a Series on Building a Circular Economy for All in November 2021. The National Recycling Strategy: Part One of a Series on Building a Circular Economy is focused on enhancing and advancing the national municipal solid waste (MSW) recycling system and identifies strategic objectives and stakeholder-led actions to create a stronger, more resilient, and cost-effective domestic MSW recycling system. It is part one of a series dedicated to building a circular economy for all.
In March 2022, the European Commission released the first package of measures to speed up the transition towards a circular economy, as part of the circular economy action plan. The proposals include boosting sustainable products, empowering consumers for the green transition, reviewing construction product regulation, and creating a strategy on sustainable textiles. In November 2022, the Commission proposed new EU-wide rules on packaging. It aims to reduce packaging waste and improve packaging design, with for example clear labelling to promote reuse and recycling; and calls for a transition to bio-based, biodegradable and compostable plastics.
The emergence of these policies has brought new opportunities to the development of the circular economy market.
