Posted: 28 Jul. 2020 03 min. read

Circular economy and our energy system

In this brief and with due respect to the challenging times we live in, we thought we’d float the concept of a circular economy – a positive, exciting idea that took centre stage at the 2020 World Economic Forum earlier this year and has animated global thinking from leading governments, businesses and civil society.

The concept of a circular economy is an overarching, systemic concept that provides a framework for enabling our society and economy to flourish while staying within safe environmental boundaries. In this brief, we make a case for how applying circular economy principles can configure our energy system to drive towards net zero emissions while using resources sustainably.

Circular economy is powered by the energy transition

The circular economy involves keeping resources, such as energy, at its highest value use for as long as possible. The circular economy is a fundamental shift away from the conventional, linear ‘take-make-dispose’ economy, where goods are made, sold and then discarded as waste.

Three key principles underlying a circular economy are:

  • Designing out waste and pollution. This involves thinking about how to design our production systems so that they minimise or even avoid waste or pollution. It involves systems thinking, collaboration and harnessing digital technologies.  For example, buildings can be designed in ways that are more energy efficient or use digital technologies, such as Internet of Things enabled smart sensors, to optimise heating, cooling and lighting systems.
  • Keep products and materials in use. This involves preserving the value of materials for as long as possible through business models that extend product life and reuse, refurbish or recycle goods. Examples include:
    • water utilities such as Sydney Water that has a wastewater-to-energy cogeneration plants that convert wastewater into biogas and heat.
    • New leasing models such as Philips ‘lighting as a service’ where businesses pay a subscription fee for lighting which cuts energy costs while maintain an incentive for Philips to maintain a high-performance lighting system.
  • Regenerate natural systems. This principle is inspired by natural ecosystems where all materials are drawn from renewable resources, including renewable energy, and there is no environmental degradation.


Case in focus: Tackling waste from the energy transition through a circular economy perspective

The uptake of residential solar PV has been a confident pivot towards renewables, but the potential downside is that there could be a looming e-waste issue when solar PV panels reach the end of their useful life.

However, from a circular economy perspective, this e-waste could present an opportunity to recover the precious metals in solar panels. Indeed, there are estimates that the global value of the spent resources to make all our electronic devices (not just PV) is collectively worth three times the annual output of all the world’s silver mines. Researchers at the University of NSW, are designing ‘micro-factories’ that take e-waste and extract valuable metals and materials for recycling and re-use. These innovations coupled with the right incentives could ensure that e-waste, including waste generated through the energy transition, can be kept for valuable use in the economy.

Author: Marc Tutaan 

Meet our author

Kumar Padisetti

Kumar Padisetti

Partner, Financial Advisory

Kumar is a Partner in the Financial Advisory practice and is responsible for the Energy and Resources Sector. He specialises in portfolio management, policy advice, commercial and financial analysis, market modelling (electricity, gas and renewable energy), strategic positioning and assisting clients with growth strategies. Kumar helps his clients make future decisions with confidence.