Last January, a “fetid smog” settled over Beijing. As The Economist noted: “A swathe of warm air in the atmosphere settled over the Chinese capital like a duvet and trapped beneath it pollution from the region’s 200 coal-fired power plants and 5m cars. The concentration of particles with a diameter of 2.5 microns or less, hit 900 parts per million – 40 times the level the World Health Organization deems safe. You could smell, taste and choke on it.”

The Economist suggested this might have been a game-changing moment for China, as the need to balance economic growth with environmental concerns came to the fore. The so-called “airpocalypse” led to a series of reforms to restrict air pollution and the decision to spend US$ 275 billion over the next five years to clean up.

China is by no means the only country grappling with pollution, but it is timely that the circular economy – essentially, a way to make sure that industry designs goods that can be broken down and disposed of safely – is on the agenda in Dalian this week.

The circular economy offers a way to promote economic growth while helping to deal with environmental crises.

Globally, the middle classes are set to increase to 5 billion people, purchasing ever greater amounts of consumer goods and services. While this trend will lift millions of people out of poverty, it will also put increasing pressure on the old linear economic model where, according to the Ellen MacArthur Foundation, “resources are extracted from the Earth for production and consumption on a one-way track”.

We all face a potentially game-changing moment, when we move from the old “take, make and waste” model to the circular economy, which is designed to be much less draining in terms of materials and energy. The stark reality is that we cannot sustain economic growth in the decades to come unless we make this switch and learn to design goods for disassembly and safe recycling.

There are four global crises the circular economy will help us to tackle:

1)     The climate crisis: Not only is the ultimate goal of the circular economy to move to renewable energy – leading to lower carbon emissions – but the recycling and reuse of materials will make industry much less energy intensive than the current linear system.

2)     The toxicity crisis: We inhale chemicals from manufactured goods all the time. We may not think about it but – given that we spend 90% of our time indoors – this is a major problem if not properly addressed. Plastics, paints, textiles and so on give off gases that contain toxins and dust particles, causing asthma as well as other diseases. As the world become more urban, we need to ensure that the materials that go inside buildings are made with human health and the environment in mind. The “cradle to cradle” approach identified by William McDonough and Michael Braungart and adopted by my company, Desso, offers a framework for making sure all products are safe and designed to be recycled and reused.

3)     Raw material scarcity crisis: We simply don’t have an endless supply of raw materials in the earth – copper, phosphates, zinc, oil and the like – with which to continue the economic growth rates of the past century. At present, about 80% of waste from consumer goods, whether packaging, clothes or shoes, ends up in incinerators, landfill and wastewater. Yet, there is commercial value to be gained from finding recycle-and-reuse business models, which could amount to US$ 700 billion in consumer goods material savings every year, according to a report from the Ellen MacArthur Foundation.

4)     Energy crisis: Our reliance on fossil fuels is not only unsustainable in the long term, but also makes us vulnerable to economic shocks now. As the American economist Jeremy Rifkin put it, “When fuel costs rise, all the other prices across the supply chain go through the roof, because everything’s made out of fossil fuels: fertilizers, pesticides, pharmaceuticals, construction materials, synthetic fibres, power, transport, heat and light.” Rifkin calls for a more stable energy system based on a new, technologically enabled power grid supplying renewable energy to homes, offices and plants. The circular economy, with its long-term focus on the use of renewable energy sources and its less energy intensive model provides a potential structure for this.

China may have experienced an environmental game-changing moment recently. I would suggest that we all have a responsibility to push for a more regenerative economic model that will balance the drive for greater prosperity with the realities of finite natural resources.

Read the World Economic Forum’s new report on the Circular Economy 

Read more blogs for the World Economic Forum’s Annual Meeting in Davos 2014.

Alexander Collot d’Escury is the Chief Executive Officer of Desso. He is taking part in the session The Circular Economy in Application at the Annual Meeting of the New Champions in Dalian, People’s Republic of China.

Image: The moon shines above a sculpture containing 7,000 recycled plastic water bottles with LED lights. REUTERS/Bobby Yip