The Repurposing Life

Why We Need a Circular Economy

A circular economy (CE), often referred to simply as “circularity,” is an economic system aimed at eliminating waste and the continual use of resources. Circular systems employ reusing, sharing, repairing, refurbishing, remanufacturing, and recycling to create a closed-loop system. Minimizing the use of resource inputs (resource depletion) and the creation of waste, pollution, and carbon (CO2) emissions.

CE aims to keep products, equipment, and infrastructure in use longer; thus improving the productivity of these resources. All “waste” should become “food” for another process. Either a by-product or recovered resource for another industrial process, or as regenerative resources for nature (e.g., compost). This regenerative approach is in direct contrast to the traditional linear economy, which has a “take, make, dispose” model of production.

Proponents of CE suggest that a sustainable world does not mean a drop in the quality of life for consumers, and can be achieved without loss of revenue or extra costs for manufacturers. The argument is that circular business models can be as profitable as linear models, allowing consumers to continue enjoying similar products and services.

Sustainability

Intuitively, circular economy would appear to be more sustainable than the current linear economic system. Reducing the resources used and the waste created, conserves resources and helps to reduce environmental pollution. However, some argue that these assumptions are simplistic. That they disregard the complexity of existing systems and their potential trade-offs.

For example, the social dimension of sustainability seems to be only marginally addressed in many publications on CE. There are cases that might require different or additional strategies, like purchasing new and more energy-efficient equipment. A team of researchers from Cambridge and TU Delft showed that there are at least eight different relationship types between sustainability and CE. In addition, it’s important to underline the innovation aspect at the heart of sustained development that’s based on CE components.

Scope

The circular economy can cover a broad scope. Findings show that researchers have focused on different areas: such as industrial applications with both product-oriented natural resources, and services. Practice and policies to better understand the limitations that CE currently faces. Strategic management for details of CE, and different outcomes such as potential re-use applications and waste management.

The circular economy includes products, infrastructure, equipment, and services; and applies to every industry sector. It includes technical resources (metals, minerals, fossils) and biological resources (food, fibers, timber). Most schools of thought advocate a shift from fossil fuels to the use of renewable energy, and emphasize the role of diversity as a characteristic of resilient and sustainable systems. The circular economy includes discussion of the role of money and finance as part of the wider debate. And some of its pioneers have called for a revamp of economic performance measurement tools.

One study points out how modularization could become a cornerstone to enable circular economy and enhance the sustainability of energy infrastructure. An example of a circular economy model is the implementation of “renting” models in traditional ownership areas (e.g. electronics, clothes, furniture, transportation). Through renting the same product to several clients, manufacturers can increase revenue per unit, thus decreasing the need to produce more to increase revenue. Recycling initiatives are often described as a circular economy, and are likely to be the most widespread models.

Background

As early as 1966, English-born American economist Kenneth Boulding, raised awareness of an “open economy.” With unlimited input resources and output sinks, in contrast to a “closed economy,” in which resources and sinks are tied and remain a part of the economy as long as possible. An, educator, peace activist, and interdisciplinary philosopher, Boulding was co-founder of general systems theory and founder of numerous ongoing intellectual projects in economics and social sciences. Boulding’s essay, “The Economics of the Coming Spaceship Earth,” is often cited as the first expression of the “circular economy.”

The circular economy is grounded in the study of feedback-rich (outputs of a system are routed back as inputs as part of a chain that forms a loop), non-linear systems (a system in which the change of the output is not proportional to the change of the input). Particularly living systems (open self-organizing life forms that interact with their environment by flows of information, energy and matter).

A Contemporary Understanding of CE

The contemporary understanding of circular economy and its practical applications to economic systems, evolved incorporating different features and contributions from a variety of concepts, sharing the idea of closed loops. Some of the relevant theoretical influences are:

• “Cradle-to-cradle,” a biomimetic approach to the design of products and systems that models human industry on nature’s processes; where materials are viewed as nutrients circulating in healthy, safe metabolisms from the birth of one generation, to the next. laws of ecology.
• Looped and performance economy (as defined by Walter R. Stahel).
• Regenerative design, a process-oriented whole systems approach to design. Processes that restore, renew, or revitalize their own sources of energy and materials. And whole systems thinking creates resilient, equitable systems that integrate the needs of society with the integrity of nature.
• Industrial ecology (IE), the study of material and energy flows through industrial systems. A growing multidisciplinary field of research which combines aspects of engineering, economics, sociology, toxicology, and the natural sciences.
• Biomimicry, the emulation of the models, systems, and elements of nature for the purpose of solving complex human problems. From the Ancient Greek: bios, life, and mīmēsis, imitation.
• Blue Economy, “The Blue Economy: 10 years – 100 innovations – 100 million jobs,” a book by Gunter Pauli.

Closed Loop Systems

The idea of closed loops was first introduced in 1971 by Barry Commoner in his book “The Closing Circle.” Commoner was an American cellular biologist, college professor, and politician. He was a leading ecologist and co-founder of the modern environmental movement, as well as the director of the Critical Genetics Project and the Center for Biology of Natural Systems. He ran as the Citizens Party candidate in the 1980 U.S. presidential election. His work studying the radioactive fallout from nuclear weapons testing led to the Nuclear Test Ban Treaty of 1963.

The circular economy was further modeled by British environmental economists David W. Pearce and R. Kerry Turner in 1989. In Economics of Natural Resources and the Environment, they pointed out that a traditional open-ended economy was developed with no built-in tendency to recycle, which was reflected by treating the environment as a waste reservoir.

In the early 1990s, British ecological economist and professor of sustainable development at the University of Surrey, Tim Jackson began to pull together the scientific basis for this new approach to industrial production in his edited collection Clean Production Strategies. Jackson is the director of the Centre for the Understanding of Sustainable Prosperity (CUSP). In his collection, he included chapters from pre-eminent writers in the field, such as Walter R Stahel, Bill Rees and Robert Constanza. At the time, this construct was still called “preventive environmental management.” In his following book, Material Concerns: Pollution, Profit and Quality of Life, Jackson synthesized these findings into a manifesto for change. Moving industrial production away from an extractive linear system towards a more circular economy.

Emergence of the Idea

In their 1976 research report to the European Commission, “The Potential for Substituting Manpower for Energy,” Walter Stahel and Genevieve Reday sketched the vision of an economy “in loops” (or circular economy), and its impact on job creation, economic competitiveness, resource savings, and waste prevention. The report was published in 1982 as the book Jobs for Tomorrow: The Potential for Substituting Manpower for Energy.

Promoting a circular economy was identified as national policy in China’s 11th five-year plan beginning in 2006. More recently, the Ellen MacArthur Foundation has outlined the economic opportunity of a circular economy. By bringing together complementary schools of thought in an attempt to create a coherent framework. Thus giving the concept a wider exposure and appeal.

Most frequently described as a framework for thinking, its supporters claim it is a coherent model with value in response to the end of the use of cheap oil and materials. Moreover, contributing to the transition to a low carbon economy. In line with this, a circular economy can contribute to meeting the COP 21 Paris Agreement emissions reduction commitments made by 195 countries. To reach the 1.5° C goal, an additional reduction in emissions of 15 billion tonnes, per year, will have to be achieved by 2030. Circular economy strategies may deliver emissions reductions that could basically bridge the gap by half.

Moving Away from the Linear Model

Linear “take, make, dispose” industrial processes and the lifestyles dependent on them, use up finite reserves to create products with a finite lifespan (they end up in landfills or in incinerators). In contrast, the circular approach takes insights from living systems. It considers that our systems should work like organisms, processing nutrients that can be fed back into the cycle — whether biological or technical — hence the “closed loop,” or “regenerative” terms usually associated with it. The generic “circular economy” label can be applied to several different schools of thought, but all of them are based on the same basic principles.

Walter R. Stahel

One prominent thinker on the topic is Walter R. Stahel, an architect, economist, and founding father of industrial sustainability. Credited with having coined the expression “Cradle-to-Cradle,” in direct contrast to “Cradle-to-Grave,” which illustrates our current resource-to-waste way of functioning. In the late 1970s, Stahel worked on developing a “closed loop” approach to production processes, co-founding the Product-Life Institute in Geneva.

In 1982, Walter Stahel was awarded third prize in the Mitchell Prize competition on sustainable business models with his paper, The Product-Life Factor.

Considered as one of the first sustainability think tanks, the main goals of Stahel’s institute are: to extend the working life of products, to make goods last longer, to re-use existing goods, and ultimately to prevent waste. This model emphasizes the importance of selling services rather than products, an idea referred to as the “functional service economy,” and sometimes the wider notion of “performance economy.” This model also advocates “more localization of economic activity.”

In the UK, Steve D. Parker researched waste as a resource in the agricultural sector in 1982, developing novel closed-loop production systems. These systems mimicked and worked with the biological ecosystems they exploited.

Towards the Circular Economy

In 2013, a report entitled “Towards the Circular Economy: Economic and Business Rationale for an Accelerated Transition” was released. The report was commissioned by the Ellen MacArthur Foundation, and developed by McKinsey & Company. It was the first of its kind to consider the economic and business opportunities for the transition to a restorative, circular model. Using product case studies and economy-wide analysis, the report details the potential for significant benefits across the EU.

It argues that a subset of the EU manufacturing sector could realize net materials cost savings worth up to $630 billion annually by 2025. Stimulating economic activity in the areas of product development, remanufacturing, and refurbishment. Towards the Circular Economy also identified the key building blocks in making the transition to a circular economy. Namely, skills in circular design & production, new business models, skills in building cascades & reverse cycles, and cross-cycle/cross-sector collaboration.

Another report done in 2015 by WRAP and the Green Alliance, “Employment and the circular economy: job creation in a more resource efficient Britain,” has examined different public policy scenarios. It estimates that, with no policy change by 2030, 200,000 new jobs will be created, reducing unemployment by 54,000. A more aggressive policy scenario could create 500,000 new jobs and permanently reduce unemployment by 102,000.

On the other hand, implementing a CE in the U.S. was presented in “Exploring institutional drivers and barriers of the circular economy: A cross-regional comparison of China, the US, and Europe,” a report by Ranta et al. The authors analyzed the institutional drivers and barriers for the circular economy in different regions worldwide. Following the framework developed by Richard Scott, “Institutions and Organization: Ideas and Interest.”

Case Studies

In the article, different worldwide environment-friendly institutions were selected, and two types of manufacturing processes were chosen for the analysis (1) a product-oriented, and (2) a waste management. 

The product-oriented case in the study was Dell, a U.S. computer technology manufacturer. Which was the first company to offer free recycling to its customers, and to launch a computer made of recycling materials obtained from a verified third-party source.

Moreover, the waste management case in the study that included many stages, such as collection, disposal, and recycling was Republic Services. Republic Services is the second largest waste management company in the US. The approach to measuring the drivers and barriers was to, first, identify indicators for their cases in the study, and then, to categorize these indicators into drivers (indicator was in favor of the CE model) or barriers (when indicator was not).

Platform for Accelerating the Circular Economy (PACE)

In 2018, the World Economic Forum, World Resources Institute, Philips, Ellen MacArthur Foundation, United Nations Environment Programme, and over 40 other partners launched the “Platform for Accelerating the Circular Economy” (PACE).  PACE follows on the legacy of WEF’s CEO-led initiative, Project MainStream, which sought to scale up circular economy innovations. PACE’s original intent has three focal areas:

1. developing models of blended finance (the strategic use of development finance and philanthropic funds to mobilize private capital flows to emerging and frontier markets) for circular economy projects, especially in developing and emerging economies;
2. creating policy frameworks to address specific barriers to advancing the circular economy; and
3. promoting public–private partnership (a cooperative arrangement between two or more public and private sectors, governments, and businesses of a long-term nature, working together to complete a project and/or provide services to the population) for these purposes

PACE members include global corporations like IKEA, Coca-Cola, Alphabet Inc., and Royal DSM. Along with governmental partners and development institutions from Denmark, The Netherlands, Finland, Rwanda, UAE, China, and beyond. Initiatives currently managed under PACE include the Capital Equipment Coalition with Philips and numerous other partners; and the Global Battery Alliance with over 70 partners, including the World Economic Forum. In January 2019, PACE released a report entitled “A New Circular Vision for Electronics: Time for a Global Reboot,” in support of the United Nations E-waste Coalition.

Circular Economy Standard BS 8001:2017

To provide authoritative guidance to organizations implementing circular economy (CE) strategies, in 2017, the British Standards Institution (BSI) developed and launched the first circular economy standard “BS 8001:2017 Framework for implementing the principles of the circular economy in organizations.” The circular economy standard BS 8001:2017 tries to align the far-reaching ambitions of the CE with established business routines at the organizational level. It contains a comprehensive list of CE terms and definitions, describes the core CE principles, and presents a flexible management framework for implementing CE strategies in organizations. Little concrete guidance on circular economy monitoring and assessment is given, however, as there is no consensus yet on a set of central circular economy performance indicators applicable to organizations and individual products.

Development of ISO/TC 323 Circular Economy Standard

In 2018, the International Organization for Standardization (ISO) established a technical committee, TC 323, in the field of circular economy to develop frameworks, guidance, supporting tools, and requirements for the implementation of activities of all involved organizations. To maximize the contribution to sustainable development. Four new ISO standards are under development. And under the direct responsibility of the committee (consisting of 70 participating members and 11 observing members).

Circular Business Models

While the initial focus of academic, industry, and policy activities was mainly the development of re-X (recycling, remanufacturing, reuse, etc.) technology, it soon became clear that the technological capabilities exceeded their implementation. To leverage this technology for the transition towards a circular economy, various stakeholders have to work together. This shifted attention towards business-model innovation as a key leverage for circular technology adaption. Rheaply, a platform that aims to scale reuse within and between organizations, is an example of a technology that focuses on asset management & disposition to support organizations transitioning to circular business models.

Circular business models can be defined as business models that are closing, narrowing, slowing, intensifying, and dematerializing loops; to minimize the resource inputs and the waste and emission leakage out of the organizational system. This comprises recycling measures (closing), efficiency improvements (narrowing), use phase extensions (slowing), a more intense use phase (intensifying), and the substitution of products by service and software solutions (dematerializing).

These strategies can be achieved through the purposeful design of material recovery processes and related circular supply chains. As illustrated in the Figure, these five approaches to resource loops can also be seen as generic strategies or archetypes of circular business model innovation.

Circular business models, as the more broad economic model, can have different emphases and various objectives. For example:

• extend the life of materials and products, where possible over multiple “use cycles”
• use a “waste = food” approach to help recover materials. Ensure those biological materials returned to earth are benign and not toxic
• retain the embedded energy, water, and other process inputs in the product & the material for as long as possible
• use systems-thinking approaches in designing solutions
• regenerate or at least conserve nature and living systems
• push for policies, taxes and market mechanisms that encourage product stewardship, for example “polluter pays” regulations

Critiques of Circular Economy Models

There is some criticism of the idea of the circular economy. As Corvellec’s 2019 technical report put it, “the circular economy privileges continued economic growth with soft anti-programs, but the circular economy is far from the most radical anti-program.” Corvellec’s 2019 Waste as scats: For an organizational engagement with waste raised the issue of multi-species and stresses “impossibility for waste producers to dissociate themselves from their waste and emphasizes the contingent, multiple, and transient value of waste.” Scatolic engagement draws on Reno’s analogy of waste as scats and of scats as signs for enabling interspecies communication.

“A key tenet of a scatolic approach to waste is to consider waste as unavoidable and worthy of interest. Whereas total quality sees in waste a sign of failure, a scatolic understanding sees a sign of life. Likewise, whereas the Circular Economy analogy of a circle evokes endless perfection, the analogy of scats evokes disorienting messiness. A scatolic approach features waste as a lively matter open for interpretation, within organizations as well as across organizational species.”

Corvellec, Hervé, “Waste as scats: For an organizational engagement with waste,” Organization, 2019

Corvellec and Stål are mildly critical of apparel manufacturing circular economy take-back systems as ways to anticipate and head off more severe waste reduction programs:

“Apparel retailers exploit that the circular economy is evocative but still sufficiently vague to create any concrete policies that might hinder their freedom of action. Their business-centered qualification of take-back systems amounts to an engagement in “market action (…) as leverage to push policymakers to create or repeal particular rules.”

Corvellec, H., & Stål, H. I., “Qualification as corporate activism: How Swedish apparel retailers attach circular fashion qualities to take-back systems,” Scandinavian Journal of Management, 2017

Research by Zink and Geyer questioned the circular economy’s engineering-centric assumptions: “…proponents of the circular economy have tended to look at the world purely as an engineering system and have overlooked the economic part of the circular economy. Recent research has started to question the core of the circular economy—namely, whether or not closing material and product loops prevent primary production.”

Other Critiques

Other critiques of the circular economy (CE), such as in “Narrating expectations for the circular economy: Towards a common and contested European transition” and “Against wasted politics: A critique of the circular economy.” For example, Allwood’s “Squaring the circular economy: The role of recycling within a hierarchy of material management strategies,” discussed the limits of CE material circularity and questioned the desirability of the CE in a reality with growing demand. 

Do CE secondary production activities (reuse, repair, remake) actually reduce? Or instead, displace primary production (natural resource extraction)? The problem CE overlooks is how displacement is governed mainly by market forces.

It’s the tired old narrative, that the invisible hand of market forces will conspire to create full displacement of virgin material of the same kind. And the argument that “the basic assumptions concerning the values, societal structures, cultures, underlying world-views, and the paradigmatic potential of CE remain largely unexplored.”

The Laws of Thermodynamics

There are fundamental limits to the concept based on the laws of thermodynamics. A branch of physics that deals with heat, work, & temperature, and their relation to energy, radiation, and physical properties of matter. Specifically, the second law of thermodynamics which states, “the total entropy of an isolated system can never decrease over time, and is constant if and only if all processes are reversible. Isolated systems spontaneously evolve towards thermodynamic equilibrium, the state with maximum entropy.”

According to the second law of thermodynamics, all spontaneous processes are irreversible and associated with an increase in entropy. Entropy is an extensive property of a thermodynamic system. It quantifies the number (Ω) of microscopic configurations consistent with the macroscopic quantities that characterize the system. It follows that in a real world implementation, one would either:

• have to deviate from perfect reversibility in order to generate an entropy increase by generating waste (which would ultimately amount to still having parts of the economy which follow a linear scheme), or
• enormous amounts of energy would be required from which a significant part would be dissipated in order for the total entropy to increase 

In its comment to the concept of the circular economy, the European Academies’ Science Advisory Council (EASAC) came to a similar conclusion:

“Recovery and recycling of materials that have been dispersed through pollution, waste, and end-of-life product disposal require energy and resources. Which increase in a non-linear manner; as the percentage of recycled material rises, owing to the second law of thermodynamics: entropy causing dispersion. Recovery can never be 100%. The level of recycling that is appropriate may differ between materials.”

Faber et al., “Circular economy: a commentary from the perspectives of the natural and social sciences,” European Academies’ Science Advisory Council (EASAC), 1987

Industries Adopting a Circular Economy

Textiles

A circular economy within the textiles industry refers to the practice of clothing and fibers continually being recycled. Re-entering the economy as much as possible rather than ending up as waste.

A circular textiles economy is a response to the current linear model of the fashion industry. In which raw materials are extracted, manufactured into commercial goods, bought, used, and eventually discarded by consumers.

“Fast fashion” companies have fueled the high rates of consumption, further magnifying the issues of a linear system. The “take-make-dispose” model not only leads to an economic value loss of over $500 billion per year, but also has numerous negative environmental and social impacts. Environmental effects like tons of clothing ending up in landfills or incinerated. And social effects putting human rights at risk. A documentary about the world of fashion, The True Cost (2015), explains how in fast fashion, “wages, unsafe conditions, and factory disasters are all excused because of the jobs created for people with no alternatives.” Fast fashion is harmful to the planet by running on a linear system.

It’s been argued that by following a circular economy, the textile industry can be transformed into a sustainable business. An Ellen MacArthur Foundation’s 2017 report, A New Textiles Economy, states the four key ambitions needed to establish a circular economy:

1. phasing out substances of concern and microfiber release
2. transforming the way clothes are designed, sold, and used to break free from their increasingly disposable nature
3. radically improving recycling by transforming clothing design, collection, and reprocessing
4. making effective use of resources and moving to renewable input

While it may sound like a simple task, only a handful of designers in the fashion industry have taken initiative: Patagonia, Eileen Fisher, and Stella McCartney. An example of a circular economy within a fashion brand is Eileen Fisher’s Tiny Factory, in which customers are encouraged to bring their worn clothing to be manufactured and resold.

In a 2018 interview (The Glossy Podcast) Eileen Fisher explained, “A big part of the problem with fashion is over-consumption. We need to make less and sell less. You get to use your creativity, but you also get to sell more without creating more stuff.”

Circular Initiatives in the Textile Industry

Circular initiatives, like clothing rental startups, are also getting more highlight in the EU and in the USA as well. Operating with circular business model, rental services offer everyday fashion, baby wear, and maternity wear for rent. The companies either offer flexible pricing in a “pay as you rent” model like PALANTA.CO does, or offer fixed monthly subscriptions such as Rent The Runway or Le Tote.

Another circular initiative is offering a take-back program. Circular Threads, located in Colorado, repurposes post-consumer waste materials (old denim jeans, retired climbing rope, discarded sails) into new products. Their take-back program allows the consumer to return any product at any time so that it can be recycled again.

Both China and Europe have taken the lead in pushing a circular economy. A 2017 article in the Journal of Industrial Ecology states that the “Chinese perspective on the circular economy is broad, incorporating pollution and other issues alongside waste and resource concerns, [while] Europe’s conception of the circular economy has a narrower environmental scope, focusing on waste and resources and opportunities for business.”

Construction

The construction sector is one of the world’s largest waste generators. The circular economy appears as a helpful solution to diminish the environmental impact of the industry.

Construction is very important to the economy of the European Union and its state members. It provides 18 million direct jobs and contributes 9% of the EU’s GDP. The main contributors to the environmental impact of the construction industry are: the consumption of non-renewable resources, and the generation of contaminant residues. Both of which increase at an accelerating rate.

Decisions about the circular economy can be made at the operational (connected with particular parts of the production process), the tactical (connected with whole processes), and the strategic (connected with the whole organization) levels within an organization. It may concern both construction companies as well as construction projects. Where a construction company is one of the stakeholders who may affect, be affected by, or perceive itself to be affected by a decision, activity, or the outcome of a project.

A good case for the circular economy in the construction sector at the operational level, is the idea of walnut husks (hard, light, and naturally abrasive) can used in cleaning brick surfaces. Abrasive grains are produced from crushed, cleaned and selected walnut shells. They are classified as reusable abrasives. A first attempt to measure the success of circular economy implementation was done in a construction company. The circular economy can contribute to creating new posts and economic growth. According to Gorecki, one such post may be the Circular Economy manager employed for construction projects.

Automotive

The circular economy is beginning to catch on inside the automotive industry. There are incentives for carmakers to do so as specified in a 2016 report by Accenture. Which stated that the circular economy could redefine competitiveness in the automotive sector in terms of price, quality, and convenience. It could double revenue by 2030, and lower the cost base by up to 14%. So far, the circular economy in the automotive sector has been limited to using parts made from recycled materials, remanufacturing of car parts, and looking at the design of new cars. 

The vehicle recycling industry (in the EU) is only able to recycle 75% of the vehicle, but 25% is wasted and ends up in landfills. In the electric vehicle industry, robots are used to disassemble the vehicle. The EU’s European Training Network for the Design and Recycling of Rare-Earth Permanent Magnet Motors and Generators in Hybrid and Full Electric Vehicles (ETN-Demeter project) is tackling the sustainable design issue. For example, changing the designs of electric vehicles so that the magnets can be easily removed for recycling.

Some car manufacturers, such as Volvo, are also looking at alternative ownership models; like leasing from the automotive company “Care by Volvo.”

Logistics

The logistics industry plays an important role in the Dutch economy because the Netherlands is located in a geographical area where commodities transit daily. The Netherlands is an example of an EU country that has increasingly moved towards a circular economy. Given the vulnerability of the Dutch economy, being dependent on raw materials imported from countries like China. Making the country susceptible to the unpredictable fluctuations in import costs.

Research related to the Dutch economy shows that 25% of Dutch companies are knowledgeable and interested in a circular economy; furthermore, this number increases to 57% for companies with more than 500 employees. Areas of interest are: chemical industries, wholesale trade, manufacturing, agriculture, forestry, and fisheries. Because there’s a clear potential for reduction in costs when reusing, recycling and reducing import of raw materials.

In addition, logistic companies can enable connection to a circular economy by providing customers with incentives to reduce costs. Through shipment and route optimization, and offering services such as prepaid shipping labels, smart packaging, and take-back options. The shift, from linear flows of packaging to the circular flows of a circular economy, is critical for the sustainability of the packaging industry. The government-led initiative aimed at developing a circular economy in the Netherlands currently targets 2050.

Transport

Several statistics indicate that there will be an increase in freight transport worldwide. Which will affect its environmental impact, and global warming potential. Creating a challenge to the logistics industry. However, the Dutch Council for the Environment and Infrastructure (Rli), provides a new framework by which the logistics industry can add value to sectors in the Dutch economy. One such is an exchange of resources (either waste or water) to be used for production in different industries. Additionally, changing the transit port concept to a transit hub. The Rli also studied the role of the logistics industry in three sectors: agriculture, chemical, and high technology.

Agriculture

The Netherlands aims to have a completely circular economy by 2050. It has foreseen a shift to circular agriculture “kringlooplandbouw” as part of this plan. This shift projects having a “sustainable and strong agriculture” as early as 2030. Changes in Dutch laws and regulations will be introduced. Some key points in this plan include:

• closing the fodder-manure cycle
• reusing as much waste streams as possible (a team Reststromen will be appointed)
• reducing the use of artificial fertilizers in favor of natural manure
• providing the chance for farms within experimentation areas to deviate from law and regulations
• implementing uniform methods to measure the soil quality
• providing opportunity for agricultural entrepreneurs to sign an agreement with the “Staatsbosbeheer” (State forest management) to have it use the lands they lease for “natuurinclusieve landbouw” (nature-inclusive management)
• providing initiatives to increase the earnings of farmers

Furniture

When it comes to the furniture industry, most of the products are passive and durable. Accordingly, implementing strategies and business models that extend the lifetime of the products (repairing and remanufacturing) would have lower costs and environmental impacts.

The EU has seen a huge potential for implementing a circular economy in the furniture sector. Currently, out of 10,000,000 tonnes of annually discarded furniture in the EU, ends up in landfills or is incinerated. There is potential to increase gross value added (GVA) to €4.9 billion, and to create 163,300 jobs just by switching to a circular model by 2030.

A study on Danish furniture companies‘ efforts for a circular economy states that 44% included maintenance in their business models; 22% had “take-back” schemes; and 56% designed furniture for recycling. One conclusion is that although a circular furniture economy in Denmark is popular, companies lack knowledge on how to effectively transition.

Another report in the UK saw a huge potential for reuse and recycling in the furniture sector. The study concluded that around 42% of the bulk waste sent to landfills annually (1.6 million tonnes) is furniture. They also found that 80% of the raw material in the production phase is waste. Rype Office is one example of a furniture company that offers remade and refurbished options to customers.

Oil and Gas

The uptake-to-reuse in the oil and gas industry is very poor. The opportunity to reuse is most evident when the equipment is being decommissioned. Hundreds of thousands of tons of waste are being brought back onshore to be recycled. Unfortunately, what this equates to; is equipment, which is perfectly suitable for continued use, being disposed of. Read more in “About Legasea.”

In the next 30–40 years, the oil and gas sector will have to decommission 600 installations in the UK alone. Over the next decade around 840,000 tonnes of materials will have to be recovered at an estimated cost of £25Bn. In 2017, North Sea oil and gas decommissioning became a drain on public funds. Since UK taxpayer revenue covers 50%–70% of the cost, there’s need to discuss the most economic, social and environmentally beneficial solutions.

Organizations such as Zero Waste Scotland have conducted studies to identify areas with reuse potential. Allowing equipment to continue life in other industries, or be redeployed for oil and gas. As outlined in the “North sea oil and gas rig decommissioning & re-use opportunity” report.

Strategic Management and the Circular Economy

The CE does not aim at changing the profit maximization paradigm. The short or long run process by which the price, input, and output levels that will lead to the highest profit are determined. Rather, it suggests an alternative way of thinking. Like how to attain a sustained competitive advantage (SCA), the attribute that allows an organization to outperform its competitors. While concurrently addressing the environmental, social, and economic concerns of the 21st century.

Indeed, stepping away from linear forms of production often leads to development of new core competencies along the value chain. And ultimately leads to superior performance that cuts costs, improves efficiency, meets government regulations, and green consumer expectations. Despite multiple examples of companies successfully embracing circular solutions across industries. And in spite the wealth of circular action directives a firm can employ to fit its unique profile and goals; CE decision-making remains a highly complex exercise with no one-size-fits-all solution.

The complexity of this subject is perceived, by most companies, as something not applicable, too costly, or too risky to implement. As described in the 2018 article “Perceptions of Firms Participating in a Circular Economy,” published in European Journal of Sustainable Development. This concern is evident in the results of ongoing monitoring studies like the “Circular Readiness Assessment” of 2018.

Strategic Management

Strategic management is the field of management that allows companies to carefully evaluate CE-inspired ideas. But it also helps in taking a firm apart to investigate if/how/where seeds of circularity can be found or implanted. It involves the formulation and implementation of the major goals of an organization’s top managers on behalf of stakeholders. It’s based on considering resources and assessing the internal and external environments in which the organization operates.

The book Strategic Management and the Circular Economy defined, for the first time, a decision-making process that covered all three phases: analysis, formulation, and planning. Each phase is supported by frameworks and concepts popular in management consulting. Concepts such as:

• an idea tree – a diagram that depicts suggested relationships between concepts
• a value chain – a set of activities that a business performs so as to deliver a valuable product to their market
• VRIO – a business analysis framework that forms part of a firm’s larger strategic scheme
• Porter’s five forces – a method for analyzing competition of a business
• PEST – a framework of macro-environmental factors used in the environmental scanning component of strategic management
• SWOT – a strategic planning technique used by an organization to identify strengths, weaknesses, opportunities, and threats related to competition
• strategic clock, or internationalization matrix – the process of increasing involvement of enterprises in international markets

All adapted through a CE lens, hence revealing new sets of questions and considerations. There’s argument that all standard tools for strategic management can and should be calibrated and applied to a CE.

Specific arguments have already been made for the strategy direction matrix of product vs. market. The “3 × 3 GE-McKinsey” matrix, a technique used in brand and product marketing to identify what products to add to an organization’s portfolio, and in which market opportunities to continue investing.

The “BCG” (or growth–share) matrix, a chart for analyzing business units (product lines) to assess business strength vs. industry attractiveness. For market share vs. industry growth rate, there’s “Kraljic’s portfolio” matrix.

Impact in Europe

On December 17th 2012, the European Commission published a document entitled Manifesto for a Resource Efficient Europe. This manifesto states that “In a world with growing pressures on resources and the environment, the EU has no choice but to go for the transition to a resource-efficient and ultimately regenerative circular economy.” 

Furthermore, the document highlights the importance of a “systemic change in the use and recovery of resources in the economy,” to ensure future jobs and competitiveness. It also outlines potential pathways to a circular economy. Pathways in innovation, investment, and regulation that tackle harmful subsidies, set clear targets, and increase opportunities for new business models.

Horizon 2020

The “European Environmental Research and Innovation Policy,” a set of strategies, actions and programs to promote greater research and innovation. For the purpose of building a more resource-efficient and climate-resilient society and economy. Strategies that are in sync with the natural environment. This policy aims at supporting the transition to a circular economy in Europe. Defining and driving the implementation of a transformative agenda to green the economy and the society as a whole. To achieve a truly sustainable development.

Sustainable development is the principle for meeting human development goals, while simultaneously sustaining natural systems that provide the resources upon which economy and society depend. Research and innovation in Europe are financially supported by the program Horizon 2020. The “Framework Programmes for Research and Technological Development,” also called “Framework Programmes,” abbreviated to FP1 through FP7. FP8 was ultimately named “Horizon 2020.” These programs were created by the European Union/European Commission to fund, support, and foster research in the European Research Area (ERA). Although it’s also open to participation worldwide. 

CE plays an important role in the economic growth of European countries. It highlights the roles of sustainability, innovation, and investment in zero waste initiatives that promote wealth. Read Hysa, Kruja, Rehman, and Laurenti’s “Circular Economy Innovation and Environmental Sustainability Impact on Economic Growth: An Integrated Model for Sustainable Development,” Sustainability, 2020 for full details.

European Union and a Circular Economy

The European Union’s (EU) plan for a circular economy is laid out in its 2018 Circular Economy Package, “Circular Economy Strategy – Environment – European Commission.” Historically, the policy debate in Brussels focused mainly on waste management. But waste management is the second half of the cycle, very little is said about the first half. The first half, eco-design, is an approach to designing products with consideration for the environmental impact of said product along its whole life cycle. To draw attention from policymakers and other stakeholders to this loophole, Ecothis was launched. This EU campaign raises awareness about the economic and environmental consequences of excluding eco-design from the circular economy.

Related Concepts

The various approaches to “circular” business and economic models share several common principles with other conceptual frameworks:

Appropriate Technology

Appropriate technology is a movement that makes technological choices and applications minimized, localized, affordable, decentralized, labor-intensive, energy-efficient, and environmentally sound. It was originally named intermediate technology by economist Ernst Friedrich “Fritz” Schumacher in his work Small Is Beautiful. Schumacher and many modern-day proponents of appropriate technology emphasize the technology as “people-centered.”

“The Biosphere Rules”

The Biosphere Rules is a framework for implementing closed-loop production processes. They derived from nature systems and translated for industrial production systems. The five principles are:

1. Materials Parsimony
2. Value Cycling
3. Power Autonomy
4. Sustainable Product Platforms
5. Function Over Form

BlueCity

BlueCity is a platform for the circular economy located in the former Center Parcs site Tropicana, in Dutch Rotterdam. It is home to a collective of small businesses operating within a zero waste circular economy. Which itself is influenced by the Blue Economy. They are using and transforming the derelict swimming pool complex following the principles of the circular economy. The site was bought at public auction for €1.7 m in 2015.

Blue Economy

The concept of a Blue Economy was initiated by former Ecover CEO and Belgian entrepreneur Gunter Pauli. It’s derived from the study of natural biological production processes. In his official manifesto Pauli states, “using the resources available…the waste of one product becomes the input to create a new cash flow.”

Container-Deposit Legislation

Container-deposit legislation, is any law that requires collecting a monetary deposit on beverage containers at the point of sale; and/or the payment of refund value to the consumer. When the container is returned to a redemption center (or retailer), the deposit is partially or fully refunded. It is a deposit-refund system.

Durable Good

In economics, a durable good (hard good or consumer durable) is a good that does not quickly wear out. More specifically, one that yields utility over time, rather than being completely consumed in one use. Items like bricks could be considered perfectly durable goods because they should theoretically never wear out. Highly durable goods (such as refrigerators or cars) continue to be useful for three or more years of use. So, durable goods are typically characterized by long periods between successive purchases.

European Green Deal

The European Green Deal is a set of policy initiatives by the European Commission, with the aim of making Europe climate-neutral by 2050. An impact-assessed plan implemented to increase the target for the European Union‘s (EU) greenhouse gas reduction to 50% by 2030. The plan is to review each existing law on its climate merits. And also to introduce new legislation for a circular economy, building renovation, biodiversity, farming, and innovation.

Food vs. feed

Food vs. feed refers to the competition for resources (such as land) between growing crops for humans, or growing crops for animals.

Government by Algorithm

Government by algorithm is an alternative form of government or social order. Its basic tenet is the usage of computer algorithms (especially artificial intelligence and blockchain) is applied to regulations, law enforcement, transportation, or land registration. Alternatively, algorithmic regulation is defined as setting the standard, monitoring, and modification of behavior by means of computational algorithms. In its scope is judiciary automation.

Green Economy

The green economy is defined as economy that aims at reducing environmental risks and ecological scarcities. This economic model aims for sustainable development without degrading the environment. It is closely related with ecological economics, but has a more politically applied focus.

“To be green, an economy must not only be efficient, but also fair. Fairness implies recognizing global and country level equity dimensions. Particularly in assuring a just transition to an economy that is low-carbon, resource efficient, and socially inclusive.”

The 2011 UNEP Green Economy Report

Life Cycle Thinking

Life cycle thinking is an approach to becoming mindful of how everyday life affects the environment. This approach evaluates how both consuming products and engaging in activities impacts the environment. This approach not only evaluates them at one single step, but the whole of an entire product or activity system.

List of Environment Topics

The natural environment, commonly referred to simply as the environment, includes all living and non-living things occurring naturally on Earth.

Path Analysis (Statistics)

In statistics, path analysis is used to describe the directed dependencies among a set of variables. This includes models equivalent to forms of multiple regression analysis, factor analysis, canonical correlation analysis, and discriminant analysis. It also includes more general families of models in the multivariate analysis of variance and covariance analyses.

Resource Recovery

Resource recovery is using wastes as an input material to create valuable products as new outputs. The aim of resource recovery is to reduce the total amount of waste generated. Therefore reducing the need for landfill space and also extracting maximum value from waste.

Sharing Economy

The capitalist sharing economy is a way of purchasing goods and services that differs from the traditional business model. The traditional business model is where corporations hire employees to produce products to sell to consumers. In the sharing economy, individuals hire out their assets (things like their cars, homes and personal time) to other individuals, in a peer-to-peer fashion.

Social Metabolism

Social metabolism or socioeconomic metabolism is the set of flows of materials & energy that occur between nature and society; as well as between and within societies. These human-controlled material and energy flows are a basic feature of all societies. But their magnitude and diversity largely depend on specific cultures, or sociometabolic regimes. Social or socioeconomic metabolism is also described as “the self-reproduction and evolution of the biophysical structures of human society. It comprises those biophysical transformation processes, distribution processes, and flows, which are controlled by humans for their purposes. The biophysical structures of society and socioeconomic metabolism together form the biophysical basis of society.”

Synthetic Fuels

Synthetic fuel or synfuel is a liquid or (sometimes) gaseous fuel, obtained from syngas (a mixture of carbon monoxide and hydrogen). The syngas is derived from the gasification of solid feedstocks (such as coal or biomass), or by the reforming of natural gas.

Upcycling

Upcycling, or creative reuse, is the process of transforming by-products, waste materials, useless, unwanted products into new materials or products. These “new” products are perceived to be of greater quality, such as artistic or environmental value.

Sources:
https://en.wikipedia.org/wiki/Circular_economy