Business Models for the Circular Economy

Opportunities and Challenges for Policy

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Natural resources, and the materials derived from them, represent the physical basis for the economic system. Recent decades have witnessed an unprecedented growth in demand for these resources, which has triggered interest from policy makers in transitioning to a more resource efficient and circular economy. This report presents a typology of five circular business models that could support the transition to a more resource efficient and circular economy: circular supply, resource recovery, product life extension, sharing, and product service system models. It reviews the current market penetration and assesses the potential scalability of each business model. Environmental potential is also discussed, as well as risks and unintended consequences that could result from a more widespread adoption of these business models. The report provides a broad set of policy approaches that could help alleviate some of the barriers that currently hinder the widespread adoption of circular business models.


The current scale and potential scalability of circular business models

This chapter moves from describing different circular business models to assessing their potential scalability. Each of the headline business models considered in this report is analysed in terms of, i) their current market share, and ii) their ability to significantly scale up. The former draws upon existing market data from a variety of sources, while the latter is based on a review of the literature relating to these business models. The chapter concludes by summarising the current market penetration of circular business models, and by identifying several fundamental barriers to their future adoption.


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