Summary of Key Points
Experts in circular economy, such as Zhu Dajian, believe that China has mainly completed the first half of the task in developing a circular economy over the past two decades, which focuses on "end-of-pipe recycling and utilization" (a so-called "waste economy"), but the goal of "source reduction" (also known as a "cradle-to-cradle economy") is still far from being achieved. Now that China has entered an era of optimizing existing resources, the circular economy needs to shift from simply collecting waste to enabling resources to perform multiple functions. This can be accomplished through improved product design, increased product durability, and service models like battery swapping, all while reducing waste generation at the source of production and consumption. The aim is to balance commercial and social values, ultimately achieving a decoupling between GDP growth, carbon emissions, and the total amount of waste produced. In the future, the circular economy must also integrate with smart energy management (smart technology + low-carbon practices) to become a key driver of high-quality development.
The Past Two Decades of Circular Economy: We've Only Done Half the Task
The greatest achievement of China's circular economy over the past two decades has been the significant increase in waste recycling rates—11 billion tons of waste are recycled each year, with recycling rates reaching 60%-80%, which has reduced the need for landfills and pollution. However, this is only a victory within the framework of a "waste economy," not the full realization of a circular economy.
The problem lies at the source: The rate of waste generation continues to rise sharply, with little change in the trend, suggesting that a turning point may not come until after 2030. There are two main reasons for this: first, there is a reliance on the "pollute-first, treat-later" approach; second, there is a confusion of concepts, as many people equate circular economy with environmental protection, focusing only on recycling without addressing how to reduce waste production.
Zhu Dajian uses an analogy: It's like taking an exam where we have only answered one question (recycling) and missed the more important one (source reduction), meaning we have only completed half of the task.
Circular Economy Is Not About Collecting Waste, but About Making Resources Perform Multiple Functions
The essence of a circular economy is about creating economic value through the reuse of resources. This involves two main aspects:
1. Source Reduction (Avoid): Reducing waste at the design and production stages—for example, by making products more durable or designing them to be disassembled and reused (from cradle to cradle).
2. End-of-Pipe Recycling (Recycle): Reusing existing waste to avoid landfilling and incineration.
In the past, we focused on the latter aspect; now, we need to shift our emphasis to the former. For instance, a cup that can be used ten times instead of being discarded after one use saves nine times the amount of raw materials required; a car that can be repaired and reused for ten years rather than being scrapped after five years, or a battery that can be recycled through a swapping system—these are all examples of making resources perform multiple functions, which is both environmentally friendly and cost-effective.
Zhu Dajian has also expanded on the 3R principles (Reduce, Reuse, Recycle) to include "three economic cycles": material recycling (turning waste into new materials), product recycling (upgrading and reusing products), and service recycling (providing services rather than selling physical products, such as battery swapping).
The Era of Optimizing Existing Resources Has Arrived
As China transitions from growth based on expanding resources to optimizing existing assets, we can no longer rely on extracting new materials and creating new products to drive development. Instead, we must make better use of what we already have.
For example:
- Automobiles: Chinese cars have a shorter lifespan compared to those in Switzerland (5-6 years), but with circular economy practices, car lifespans can be extended, reducing the amount of idle vehicles.
- Batteries: Companies like CATL offer battery swapping services. Users rent batteries, and manufacturers produce more durable ones because the longer they are rented, the more profit they make, thus activating the unused value of these resources.
- Sharing Economies: Platforms like shared bicycles and coworking spaces also promote the reuse of items.
Zhu Dajian emphasizes that in this era of optimizing existing resources, making one resource perform multiple functions is more cost-effective than extracting new ones.
Which Industries Are the Main Battlegrounds for Circular Economy?
The main battlegrounds for circular economy are industries where "Scope 3" carbon emissions (emissions from the entire lifecycle of products and services) are significant. It's important to understand two concepts:
- Energy Flow: Sources like coal, oil, and electricity directly contribute to carbon emissions (Scope 1 and 2).
- Material Flow: The extraction, production, and disposal of materials also contain hidden carbon emissions (Scope 3).
Scope 3 emissions are often more than twice those of Scope 1 and 2, especially in industries like fashion, automotive, construction, and power batteries. These sectors are where circular economy efforts should be focused.
For example, CATL has successfully managed the material flow of power batteries by recycling materials, reusing them, and offering battery swapping services, addressing both resource scarcity and generating revenue.
Companies in Circular Economy: Profitability and Social Responsibility
Circular economy is not about losing money; it's about balancing commercial and social values. Enterprises need to adopt a "dual value" approach, where commercial profit (economic value) and social responsibility (environmental protection) are interconnected. If one aspect is neglected, the overall outcome will be negative:
- Focusing only on profit without considering environmental impact will eventually lead to market or policy challenges.
- Only focusing on environmental protection without generating profit is not the role of a business (that falls under the category of philanthropy).
Companies like CATL demonstrate this by recycling and swapping batteries, gaining control over the pricing of recycled materials while reducing waste.
Zhu Dajian also points out that ESG (Environmental, Social, and Governance) practices should not be a mere annual report exercise but part of strategic planning from the beginning. The goal should be to find business opportunities in solving social issues—for example, reducing carbon emissions while generating profits through circular economy.
Future Trends: Circular Economy + Smart Energy Management = A Dual Revolution of Intelligence and Low Carbon
Zhu Dajian is particularly excited about the integration of smart energy management with circular economy. Together, these two technologies form the pillars of the Fourth Industrial Revolution:
- Circular economy manages the "material flow" by promoting resource reuse.
- Smart energy management ensures that computing power is powered by renewable energy.
The combination of these two approaches represents a dual revolution of intelligence and low carbon, where AI can optimize resource allocation in circular economies, making China's growth more efficient, environmentally friendly, and economically beneficial.
In summary, the next phase of circular economy will focus on shifting from end-of-pipe recycling to source reduction, transforming the "waste economy" into a true circular economy that drives higher-quality economic growth.