The circular economy and sustainable manufacturing

Shivangi Sharma

Overview

The Government has appointed an independent Circular Economy Taskforce to advise on the co-creation of a circular economy strategy.[1] This is intended to start the transition away from the traditional linear economy that operates on a “take-make-dispose” basis. The circular economy (CE) model promotes using products and materials for as long as possible through local maintenance, repair, reuse, refurbishment, remanufacturing, and recycling (PN646), as well as lowering consumption and reducing resource use.[2][3][4][5]

It seeks to address the economic and environmental impacts of waste production, resource depletion, climate change and biodiversity loss, while addressing social needs and increasing resource security.[6][7]

One area of the circular economy is sustainable manufacturing that seeks to minimise environmental impact while preserving economic performance through processes related to materials, energy, and waste.[8] The 2017 Industrial Strategy included this as a key aspect along with initiatives like the Industrial Strategy Challenge Fund with a focus on “clean growth”. UKRI has invested in research into circular economy technologies that include:[9]

next generation manufacturing
advancing recycling capability
materials for a sustainable future
maximising value from existing resources and systems
embedded ‘cradle to cradle’ design for sustainability

The taskforce initially focused on defining key terms, establishing metrics and targets, and providing initial recommendations.[1] The next phase will culminate in the publication of the strategy and roadmaps by autumn 2025.

Some existing circular economy measures are already in place, including:

The UK’s Extended Producer Responsibility (EPR) regulations for packaging.[10] The EPR system is designed to encourage manufacturers to take responsibility for the environmental impact of their products, shifting waste management and material recovery responsibilities from governments to producers. It is an ongoing, iterative process to incentivise designing out environmental impacts.[11] EPR should enable the public sector to recoup the costs of waste collection from producers. Operational EPR requires producers to establish their own collection and recovery systems to meet targets, which often operate collectively through Producer Responsibility Organisations.[4] EPR is part of a broader approach to phase out harmful products and reuse and recycle more products over time to include packaging, electronics, and vehicles.
The Plastic Packaging Tax aims to encourage the use of recycled materials and reduce plastic waste (PN 724).[12]

Opportunities and Challenges

Contributors raised several challenges in relation to the transition to a circular economy, including: ensuring transparency in complex supply chains, innovation in regenerative design (where human and natural systems are designed to co-exist),[13] integrating advanced production methods, addressing skills gaps, and changing regulatory frameworks.[14][15][16][17][18][19][20]Other challenges include consumer awareness and behaviour, infrastructure and technology gaps and economic viability.[21][22][23]

Some manufacturing firms are seeking to integrate economic, environmental, and social factors into their decision-making processes to address sustainability concerns.[24] Technological innovations can facilitate sustainable manufacturing, enhance product lifecycles and improve material efficiency. These include:

Additive manufacturing (3D printing) allows for on-demand production, reducing overproduction waste and the recycling of materials directly into new products. Creating custom parts can also enable the remanufacturing of products.[25]
Digital twin technology to virtually represent physical assets. These are used in manufacturing to optimise resource efficiency, predict maintenance needs, and support design for disassembly. By tracking product lifecycles, manufacturers can plan for the reuse and recycling of materials at the end of their useful lives. [26]
Artificial intelligence and machine learning to improve supply chain efficiencies, optimise production processes, and identify new recycling pathways for materials. AI-driven systems can sort materials in recycling plants with greater precision than traditional methods.[27]
Blockchain technology for transparency and traceability in supply chains, monitoring the movement of recycled materials and verifying the claims made by manufacturers regarding their sustainability practices. [28]

Several emerging business models are changing approaches to product design, consumption, and disposal, including:

Product-as-a-Service, with companies retaining ownership of their products leased to customers. This encourages durability and the return of products for reuse or remanufacturing. It is used in sectors such as electronics, textiles, and mobility.[29]
Repair and remanufacturing to extend the lifespan of products. For instance, in the automotive industry, remanufactured parts are increasingly used.[30][31] Products such as batteries and photovoltaic panels require appropriate design to facilitate repair, remanufacture, repurposing and then recycling.[32][33][34][35][36][37][38][39]
Recycling and upcycling, such as chemical recycling to process materials previously difficult to recycle. In upcycling, used materials are converted into products of higher value, such as in the fashion and furniture industries.[40]
Changing the materials used in products can reduce the amount of material and energy used in production, such as from inorganic to organic materials, for instance, for thin film photovoltaics,[41] or living engineered materials for construction.[42]
Closed-loop supply chains continuously reuse products and materials. Companies like IKEA and Unilever are establishing closed-loop supply chains.[43]

Key uncertainties

Developing the knowledge and skills to support the transition to a circular economy and sustainable manufacturing.[44]
The just transition issues (PN706) of existing jobs declining while new job opportunities arise. This will require reskilling the labour force and addressing other inequities and international trade justice challenges.[45][46][47][48][49][50][51]

Key questions for parliament

What are the social and economic implications of the circular economy strategy and roadmaps being published in 2025?
How policy frameworks can support the transition to circular economy, including technological and business model innovations?
What are the changes and interventions needed to reduce waste in systems,[52] as well as to facilitate desired changes in consumer behaviour around repair and reuse of products, food waste (PB60) and overall demand?
Whether appropriate frameworks and infrastructure are in place for measuring resource efficiency, security and resilience in different sectors following the implementation of measures?

References

[1] HM UK Government, 2024, Circular Economy Taskforce

[2] University of Manchester. Sustainable Consumption Institute

[3] https://www.circularity-gap.world/2024

[4] Clifton, N., and Walpole, G. (2023). Future of Innovation Thought Leadership Project: Innovation for a Circular Economy. Innovation Caucus

[5] Morseletto, P. (2020) Restorative and regenerative: exploring the concepts in a circular economy. Journal of Industrial Ecology. Vol 24, Issue 4, August 2020, pp 763-773.

[6] Ellen MacArthur Foundation

[7] Defra (2025). Environment Secretary Steve Reed – Circular Economy speech

[8] Ocampo et. al., 2015, A Sustainable Manufacturing Strategy from Different Strategic Responses under Uncertainty

[9] UKRI webpage, 2024, UKRI Manufacturing and the circular economy theme

[10] DEFRA & EA, 2024, Extended producer responsibility for packaging: who is affected and what to do

[11] OECD Policy perspectives, 2024, Extended Producer Responsibility: Basic facts and key principles

[12] HM UK Government, 2024, Guidance on Plastic Packaging Tax

[13] ARUP. (2023). What is regenerative design?

[14] Sanchez-Garcia et. al., 2024, Revolutionizing the circular economy through new technologies: A new era of sustainable progress

[15] Baxter, D. et al. (2023). Developing a new scale for measuring sustainability-oriented innovation. Journal of Cleaner Production, Volume 429, 139590

[16] Ellen Macarthur Foundation. (2023). Building a circular supply chain: Achieving resilient operations with the circular economy

[17] Lacy, P. et al. (2015). Waste to Wealth. The Circular Economy Advantage. Palgrave Macmillan

[18] Boehnert, J., et al. (2022). Sustainable and Responsible Design Education: Tensions in Transitions. Sustainability, 14(11), p.6397.

[19] Design Council (2021). Beyond Net Zero: A Systemic Design Framework.

[20] Pawlyn, M. (2019). What is regenerative architecture?. RIBA Journal

[21] Lobo et. al., 2022, Barriers to Transitioning Towards Smart Circular Economy: A Systematic Literature Review

[22] Vidal-Ayuso et. al., 2023, The circular economy and consumer behaviour: Literature review and research directions

[23] Pigosso et. al., 2021, Making the transition to a Circular Economy within manufacturing companies: the development and implementation of a self-assessment readiness tool

[24] Panneels, I. (2023). The Quintuple Bottom Line: A Framework for Place-Based Sustainable Enterprise in the Craft Industry. Sustainability 15, no. 4: 3791

[25] Al Rashid et. al, 2023, Additive manufacturing for sustainability and circular economy: needs, challenges, and opportunities for 3D printing of recycled polymeric waste

[26] Mugge et. al., 2024, Digital Twins within the Circular Economy: Literature Review and Concept Presentation

[27] Acerbi et. al, 2021, Role of Artificial Intelligence in Circular Manufacturing: A Systematic Literature Review

[28] Sunny et. al., 2020, Supply chain transparency through blockchain-based traceability: An overview with demonstration

[29] Crespo et. al., 2024, Facilitating circularity: challenges and design guidelines of Product-as-a-Service (PaaS) business model offers for electrical and electronic equipment

[30] Singhal et. al., 2020, Remanufacturing for the circular economy: Study and evaluation of critical factors

[31] Bobba et. al., 2020, Analysing the contribution of automotive remanufacturing to the circularity of materials

[32] Ma, R. et al. (2024). Pathway decisions for reuse and recycling of retired lithium-ion batteries considering economic and environmental functions. Nature Communications volume 15, Article number: 7641

[33] Seika, J. et al (2024). Repurpose or recycle? Simulating end-of-life scenarios for electric vehicle batteries under the EU battery regulation. Sustainable Production and Consumption, Volume 51, Pages 644-656

[34] Helbig, C. et al. (2024). Principles of a Circular Economy for Batteries. In: Emerging Battery Technologies to Boost the Clean Energy Transition.

[35] Wolf, A. et al. (2024). Circular battery design: investing in sustainability and profitability. Energy Environ. Sci., 17, 8529-8544

[36] Rabaia, M. et al. (2024). Enabling the circular economy of solar PV through the 10Rs of sustainability: Critical review, conceptualization, barriers, and role in achieving SDGs. Sustainable Horizons, Volume 11, 100106

[37] University of Cambridge Institute for Sustainability Leadership (CISL), E.ON Group Innovation GmbH and IfM Engage. (2025). Circular Solar: The Opportunities for Increased Circularity in the Solar PV Industry. Cambridge Institute for Sustainability Leadership.

[38] Innovate UK and The Faraday Institute. (2024). Faraday Battery Challenge Research activities

[39] UKRI. (2023). Delivering the future of battery technology

[40] Borkar et. al., 2022, Enabling the Circular Economy through Chemical Recycling and Upcycling of End-of-Use Plastics

[41] NUPV Research. Northumbria Photovoltaics

[42] Hub for Biotechnology in the Built Environment. Living Construction.

[43] Gonbadi, M. et. al., 2021, Closed-loop supply chain design for the transition towards a circular economy: A systematic literature review of methods, applications and current gaps

[44] World Economic Forum. (2022). Upskill for green jobs of the future

[45] Whittard, D., et al. (2025). Working towards an environmentally sustainable and equitable future? New evidence on green jobs from linked administrative data in the UK. Journal of Cleaner Production Volume 494, 145025

[46] Yamaguchi, S. (2024). Trade implications of upstream circular economy policies. OECD

[47] De Lange, D., (2024). Circular economy international trade: An investigation of the relationship between European union circularity and international trade. Journal of Cleaner Production, Volume 484, 144350

[48] Barne, J. et al. (2022). Trade for an inclusive circular economy A framework for collective action. Chatham House.

[49] ICC & EY (2024), Putting the circular economy into motion: From barriers to opportunities