Development of the thought of Circular Economy

In their 1976 research report to the European Commission, "The Potential for Substituting Manpower for Energy", Walter Stahel and Genevieve Reday sketched the vision of an economy in loops (or circular economy) and its impact on job creation, economic competitiveness, resource savings and waste prevention.

The report was published in 1982 as the book Jobs for Tomorrow: The Potential for Substituting Manpower for Energy.

In 1982, Walter Stahel was awarded third prize in the Mitchell Prize competition on sustainable business models with a paper The Product-Life Factor.

• The first prize went to the then US Secretary of Agriculture,
• The second prize to Amory and Hunter Lovins, the fourth prize to Peter Senge.

Considered as one of the first pragmatic and credible sustainability think tanks, the main goals of Stahel's institute are to extend the working life of products, to make goods last longer, to re-use existing goods and ultimately to prevent waste.

This model emphasizes the importance of selling services rather than products, an idea referred to as the "functional service economy" and sometimes put under the wider notion of "performance economy". This model also advocates "more localization of economic activity".

Promoting a circular economy was identified as a national policy in China's 11th five-year plan starting in 2006. The Ellen MacArthur Foundation has more recently outlined the economic opportunity of a circular economy, bringing together complementary schools of thought in an attempt to create a coherent framework, thus giving the concept a wide exposure and appeal.

Most frequently described as a framework for thinking, its supporters claim it is a coherent model that has value as part of a response to the end of the era of cheap oil and materials, moreover contributing to the transition for a low carbon economy. In line with this, a circular economy can contribute to meeting the COP 21 Paris Agreement.

The emissions reduction commitments made by 195 countries at the COP 21 Paris Agreement are not sufficient to limit global warming to 1.5 °C. To reach the 1.5 °C ambition it is estimated that additional emissions reductions of 15 billion tonnes CO2 per year need to be achieved by 2030. Circle Economy and Ecofys estimated that circular economy strategies may deliver emissions reductions that could basically bridge the gap by half.