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The Circular Economy

Innovate, renovate, reuse, recycle: the circular economy is among the most efficient solutions to guarantee sustainable development.

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The circular economy has been studied since the 1970s and has become a full part of the Third Millennium's economic landscape. 

The turning point occurred in January 2012 with the publication of the report entitled “Towards the circular economy: business and economic rationale for an accelerated transition” commissioned by the Ellen MacArthur Foundation and drafted by McKinsey & Company. It was the first of its kind to consider the economic and business opportunities of a transition towards a circular model, an approach that, until then, had been linked more to individual creativity than to a broader vision.

But what is the circular economy? The circular economy is a business model with enormous potential to generate competitiveness in conjunction with innovation and sustainability. To implement this model, the traditional approach to the market, customers and natural resources must change. This allows companies to gain notable competitive advantages: reduced costs, efficient energy use, decreased CO2 emissions, optimized safer supply chains.

New terms describing the production-consumption model have been introduced along with the circular economy: sharing, loan, reuse, repair, reconditioning and recycling. Technological innovation, environmental sustainability, energy efficiency and the use of renewable resources go hand in hand, lending the circular economy all the features of a new virtuous system.

The 5 Pillars of the Circular Economy

The circular economy is a strategic ally of sustainable development. Its broad vision is essential to redesigning how we address scarce resources, global warming and waste management.

Sustainable resources

Use renewable energy sources and biodegradable, recyclable or renewable materials

Product as a service

A new concept of ownership with companies able to offer a single service that can be used by many instead of the same product replicated for multiple individuals, maximizing the usage factor and service life

Sharing platforms

Tools where users and owners can share and collaborate to optimize the cost of goods and services and the resources used to produce them

Extended service life

Produce to obtain a longer lifecycle, foreseeing more possibilities to update, repair and regenerate products

New lifecycle

Every solution intends to preserve the value of a good at the end of its lifecycle thanks to the option to reuse, regenerate, upcycle or recycle it in synergy with the other pillars.

The European Union has made the adoption of models aligned with circular economy principles a strategic priority. Politically, the circular economy offers a chance for growth and development in terms of competitiveness, innovation, environmental protection and employment.

Examples  of the Circular Economy

Starting from the 5 pillars of the circular paradigm, there are various fields of application for the circular economy approach. The use of renewable energy is a key aspect of producing circular products and resources, including the way in which the components of renewable plants are designed, manufactured, built and managed, as well as how their new life is handled. 

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Thanks to the sustainable construction site model, measures for integral waste recycling or reuse of wastewater can be studied, while waste materials can be reused to create roads or embankments. Enel Group’s “New Life” project is already investigating all the possible reuses for renewable plant components when they’ve reached their end of life. We also have other highly innovative ideas. For example, we’re already studying ways to give electric vehicle batteries a second chance by providing services to the grid or integrating them into storage plants.

The circular economy abolishes the concept of planned obsolescence: reuse tires as recycled rubber for soccer fields, use pallets as urban or outdoor furniture pieces, take advantage of food waste to create new bioplastics. In the circular economy, the classic B2C (business to consumer) relationship, based on the realization of a product in primis to meet customer needs, is transformed into C2C (cradle to cradle). Industrial models are adapted to nature, deciding which materials to use based on their new life. This creates a positive domino effect to progressively reduce CO2 emissions.

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