What Is Circular Economy & Why Is It Vital for Nature?

When talking about the economic model, you might be familiar with a linear model in which a product is made, consumed, and thrown away in a landfill. Yet, this model is not sustainable for the long term.

That is why a circular economy emerges. The circular economy is an economic model that can extend the life cycle of a product, resource, or material to be used for the long term. Then, what is a circular economy and why is it vital? This article discusses the ins and outs of circular economy, so read the explanation until the end!

What Is Circular Economy?

The circular economy is an economic model that maximizes the use of resources and minimizes waste. This concept is surely distinct from a linear economy, which has the principle of “take, use, throw,” because circular economy focuses on extending a product’s life cycle, making it more functional for a long time.

The cycle of this economic model involves consumers using manufactured goods. Additionally, the items are recycled or utilized as raw materials for future manufacture rather than being thrown away directly.

As a result, it can reduce waste in landfills. This is important because, according to the National Waste Management Information System (SIPSN) of the Ministry of Environment, there were 31.9 million tonnes of national waste as of July 24th, 2024. Moreover, 11.3 million of them were not properly managed.

That is why the circular economy has become one of the waste management solutions in Indonesia and the world. It creates a closed loop used to achieve three main goals, which are:

Reducing waste and pollution by designing products and operating processes with minimal waste and pollution.
Extending the product life cycle. Thus, products must be repairable and durable.
Regenerating natural systems by restoring ecosystems, nature conservation, reforestation, etc.

Why Is Circular Economy Important?

As mentioned before, the circular economy is crucial to reducing waste and maintaining the product’s life cycle, meaning that this economic model is significant for sustainability.

To make a product, natural resources will be utilized and the demand keeps increasing as time goes by. Furthermore, natural resource extraction has increased three times since 1970. Unfortunately, extraction and processing contribute to half the total global greenhouse gas emissions and more than 90% of biodiversity loss.

By extending the product’s life cycle, you contribute to reducing the extraction and processing of natural resources. Consequently, greenhouse gas emissions from the process of natural resources into products can be reduced.

Aside from that, the implementation of a circular economy also gives many advantages, such as:

Avoiding harm to ecosystems brought by the overuse of resources.
Lowering greenhouse gas emissions as well as air, land, and water pollution.
Preserving biodiversity by managing resources sustainably.
Promoting innovation on product recycling technologies.
Developing new industries and business models.
Promoting long-term and steady economic expansion.
Lowering the cost of production.
Making the worldwide market more competitive.
Decreasing reliance on resources.
Encouraging the development of a workforce with a wide range of expertise.
Generating new employment.
Granting underserved communities access to resources.
Lowering the disparity in society.

How to Implement a Circular Economy

Now, you already found out the definition and the advantages of the circular economy. Yet, to switch from a linear economy to a circular economy, you should make some changes supported by various parties. Below are some actions the company and individual can do to apply circular economy:

1. Creating Sustainable Product Design

The first tip is creating a sustainable product design. Products made must be easy to disassemble to make them recyclable and repairable, have good quality and have a long life, and have a variety of functions to be used continuously.

2. Sorting the Waste

The next tip is sorting the waste based on the types before throwing it away. You can sort it into the inorganic and organic ones.

Recycling will be more challenging when organic and inorganic waste are mixed because they have different properties and recycling techniques. Thus, sorting is crucial to recycle waste as efficiently as possible based on its characteristics.

3. Recycling the Waste

After being sorted, you can recycle them. Organic waste like leftover food and rotten vegetables can be composted. Moreover, inorganic waste like plastic bottles can be recycled into ecobricks.

For example, the Chandra Asri Group succeeded in recycling plastic waste into plastic asphalt utilized for more than 120 km across Indonesia and processing plastic waste into pyrolysis oil given to the fishermen in Cilegon to be used as boat fuel.

4. Extending the Product’s Life Cycle

The next method is to increase a product's lifespan by reusing outdated items, repairing broken products, and updating products to make them appear brand new.

5. Building a Strong Collaboration

For companies planning to implement a circular economy, it is important to build a strong collaboration with the government, business partners, and society. That way, you can develop sustainable products and invite the community to support businesses applying a circular economy.

Chandra Asri Group has carried out this effort by collaborating with Dinas Lingkungan Hidup (DLH) Kota Cilegon. The cooperation focuses on educating and promoting sustainable waste management and circular economy principles to SMPN 7 Kota Cilegon.

Hopefully, young generations will be aware of their environment and the importance of properly processing waste.

The Example of the Circular Economy Implementation in the Company

The good news is that many companies in Indonesia have implemented the circular economy, one of them is the Chandra Asri Group. Chandra Asri Group is a leading energy, infrastructure, and chemical solution company in Southeast Asia that has adopted a double circularity approach.

This company focuses on increasing waste management and material usage in society. Some of the implementations are as follows:

1. Integrating the Circular Economy Principles

Chandra Asri Group implements some strategies to integrate the circular economy principles and waste management, such as:

Integrating the circular economy principles internally with the operational strategies to promote material reuse and waste reduction.
Delivering circular principles to the community to promote the significance of processing plastic waste by recycling it.
Processing plastic waste into plastic asphalt that each kilometer absorbs around 1.6 million tons of plastic waste.

2. Investing in Used Cooking Oil-Based Biofuel

Aside from integrating the circular economy principles, Chandra Asri Group also invested in the used cooking oil or used cooking oil collection unit owned by TUKR (Biofront in Indonesia).

TUKR collected the used cooking oil from hotels, partners, and restaurants in Indonesia. Then, the oil will be processed by Biofront in Singapore. This initiative will help Indonesia reach its target of Net Zero Emissions by 2060 and will be crucial for advancing environmentally friendly fuel generation.

3. Developing CIRCLOⓇ

Chandra Asri Group also develops a franchise of supporting products for plastic asphalt made from shredded plastic bags, CIRCLOⓇ.

The Chandra Asri Group-owned franchise can enable local dealers and recyclers to manufacture standardized raw materials for asphalt mixtures; hence, streamlining asphalt manufacturing in Indonesian areas.

Apart from establishing the CIRCLOⓇ franchise, Chandra Asri Group also offers technical support to regional traders and recyclers who want to collaborate via the CIRCLOⓇ franchise to produce shredded plastic bags that meet PUPR standard requirements.

Moreover, Chandra Asri Group also educates contractors and asphalt mixing plant (AMP) on how to mix asphalt with plastic shreds that have been produced by local traders or recyclers through the plastic waste collection ecosystem.