8 Domeinen van de Circulaire Economie

De Circulaire Economie kent vele kanten. Discussies gaan er nog al eens over welke elementen wel meegenomen moeten worden en welke niet. Welke elementen dat zijn is niet algemeen vastgesteld. In de literatuur zien we verschillende indicatoren langs komen. The keuze voor deze indicatoren is vaak onduidelijk en lijkt meer voort te komen uit het perspectief van het vakgebied of het belangen van de omgeving waarin deze is onderzocht. Kunnen we dus wel algemene aspecten van circulariteit definiëren als ze afhankelijk zijn van de context? Als dat niet zo is, dan wordt het meten en vergelijken van circulariteit tussen organisaties, regio’s en landen nogal een uitdaging. Toch zou ik een poging willen wagen.

Domeinen van een Circulaire Economie

De onderstaande domeinen komen onder meer voort uit mijn afstudeerscriptie. Op deze domeinen zullen veranderingen plaats vinden in de transitie naar de circulaire economie. Afhankelijk van de definitie van de Circulaire Economie zijn deze domeinen soms de aanleiding en soms het gevolg. Bijvoorbeeld, vanuit het perspectief van grondstoffenschaarste is het grondstoffen domein een aanleiding en de financiële en economische winst een gevolg. In andere gevallen was de noodzaak van nieuwe business modellen en extra financiële winst een reden terwijl het reduceren van grondstofgebruik en dus de impact op het grondstofdomein daarmee een gevolg is.

1. Grondstoffen

Dit zijn de fysieke grondstoffen die gebruikt worden voor producten en diensten. Omdat er maar een beperkte hoeveelheid van iedere basisgrondstof op de Aarde aanwezig is, is het uitgangspunt om verlies en vernietiging van deze materialen te voorkomen.

2. Energie

De energie die gebruikt wordt in de vorm van elektriciteit, warmte en brandstoffen. Hier moet een duidelijk onderscheid gemaakt worden tussen energievormen uit eindige bron en uit hernieuwbare bron. Met name omdat energie uit eindige bron meestal wordt opgewekt door verbranding van grondstoffen en deze daarmee verloren gaan.

3. Emissies

emissies, en met name CO2 en CO2-equivalente uitstoot, staat momenteel hoog op de agenda met betrekking tot de klimaatverandering. Deze verandering willen we zo langzaam mogelijk laten verlopen zodat mens en natuur zich goed en tijdig kunnen aanpassen en verweren tegen de gevolgen.

4. Ecologie

De ecologie is de bron waaruit alle grondstoffen gewonnen worden. Een gezond ecologisch systeem kan er voor zorgen dat er voldoende grondstoffen gewonnen kunnen blijven worden om te voldoen aan de vraag. Daarmee moet de vraag ook afgestemd worden op wat er maximaal gewonnen kan worden.

5. Footprint

De footprint is een term die ook vaak over grondstoffen en emissie gaat. Sec gaat het met name over de impact op ruimte die nodig is voor de regeneratieve capaciteit van de natuurlijke bronnen en daarmee de Aarde in stand te houden. Een afbreuk daaraan zorgt dat we meer Aardes nodig hebben om aan onze behoefte te voldoen.

6. Economie

Het economisch effect van de circulaire economie is belangrijk om de business cases voor bedrijven sluitend te krijgen. Derhalve zijn de economische mechanismen een inherent aspect om de circulaire economie tot stand te brengen.

7. Sociaal

Het sociale impact wordt af en toe meegenomen in de redenering voor de circulaire economie. Wel is duidelijk dat de nieuwe business modellen die de circulaire economie nastreven een sociale impact hebben: andere banen, meer service gedreven, maar ook het aspect van bezit naar gebruik waarmee afbreuk gedaan wordt aan bepaalde statussymbolen. Om een volledige duurzame circulaire economie na te streven zijn de ecologische en economische pijlers net zo belangrijk als de sociale pijler.

8. Kennis

Ook het kennislandschap is een belangrijk domein binnen de circulaire economie. De kennis die opgedaan wordt moet weer terugvloeien naar de markt om keten breed de stappen te kunnen blijven zetten die nodig zijn.

En waterverbruik dan?

Een laatste domein welke af en toe ook nog wordt genoemd is watergebruik. Het gebruik van zoet water wordt soms apart genomen  omdat dit net als energie een schaarse bron is in bepaalde werelddelen. Een bron die noodzakelijk is voor het productieproces van verschillenden, naar het westen geëxporteerde, producten, maar ook om ecosystemen op peil te houden. Door het apart nemen van bijvoorbeeld water kan onze impact explicieter worden gemaakt. Toch zou ik willen pleiten om deze onder de grondstoffen te scharen omdat er meerdere grondstoffen zoals water zijn die essentieel en schaars zijn. Denk bijvoorbeeld aan fosfaat en stikstof. Uiteindelijk gaat het erom dat alle materialen schaars zijn, de een wat meer dan de ander.

Meten van Circulariteit

Afhankelijk van wat je perspectief en beweegredenen zijn, zijn je doelstellingen en KPI’s ook anders. Daarmee is het meten van circulariteit ook niet voor iedereen gelijk. Puur vanuit een grondstoffengedachte circulariteit meten zal dus totaal anders zijn dan als je ook naar economische groei en sociale impact wilt kijken. Er is dan ook een verscheidenheid aan indicatoren sets te vinden. Onderstaand grafiekje geeft aan welke domeinen het meest voorkomen in die indicator sets.

Categories Indicator systems

Aanwezigheid van verschillende circulaire economie categorieën in indicator sets.

Het meten van circulariteit is daarmee complex en niet per se eenduidig. Genoeg stof voor een volgend blogstukje.

 

8 Domains of Circularity

There are many sides to the circular economy. Even though many people consider resource usage and economic growth as indicators of the circular economy, there aren’t any generally acknowledged aspects. The various academic papers that discuss indicator systems for example all consider their own specific elements. The choice for them is often unsubstantiated with any reasoning. So the question is whether we can define any general aspects or are they dependent on the context. If so, measuring and comparing circularity between organisation, regions and countries will become rather difficult. Yet I would like to make an attempt.

Domains of Circular Economy

Anyhow, to get the discussion started, let’s create an inventory of aspects or domains of circularity. Which elements are found to be important in literature? Impacts on these domains are, depending on your definition of the Circular Economy, either cause or effect. For example, from a resource scarcity perspective, the resource domain is the cause and financial benefits are an effect. In other cases a new business model is necessary for new financial benefits; that causes a reducition in resource usage and is therefore the effect.

1. Resources

These are the physical resources that are being used for products and services. Because there’s only a limited amount of each raw material available on Earth, one of the main premises is avoiding loss and destruction of materials.

2. Energy

This category considers the energy being used such as electricity, heat and fuels. It is important to distinguish between energy from finite and renewable resources. Especially because energy from finite resources are generally generated through incineration causing a loss of these resources.

3. Emissions

Emissions, especially CO2 and CO2-equivalent emissions, are at the top of political and environmental agenda due to the eminent climate change. We want to make climate change occur as slowly as possible such that humans and nature can adapt and protect themselves timely and properly against the consequences.

4. Ecology

The ecology is a source from which all raw materials can be mined. A healthy ecological system can generate enough resources to meet our demand. Supply is therefore leading and demand should henced be matched to what can be mined maximally without harming the ecology.

5. Footprint

The footprint is a term that often deals with resources (environmental footprint) and emissions (CO2 footprint). However, both footprints are very different in meaning, and it can be argued that the emission footprint is an incorrect term. The footprint is a term that defines the space needed to accommodate some or someone’s effect. In the case of environmental footprint it is the reduced, or affected space because of some industrial or economic activity that was needed to support the regenerative capacity of natural resources. If everyone or any industrial activity would behave the same way, it can be calculated whether the Earth provides enough space to accommodate it, if not, how many extra Earths would we theoretically need?

A CO2 footprint is not about space but measures the amount of emissions exhausted. It does not directly affect the regenerative capacity of the Earth except for indirect effects such as climate change. A volume or weight of CO2 emissions is therefore not a footprint itself. A better measure would be environmental impact.

6. Economy

The economic effect of the circular economy is important for companies to close their business cases. Besides, economic mechanisms are an inherent factor in making a circular economy happen.

7. Social

The social impact is only sporadically included in the circular economy thinking. Although, it is clear that many new business models, which aim for the circular economy, have a certain social impact: a shift of jobs, more service-based, but also the transition from ownership to usage that causes people to value other things. When aiming for an holistic sustainable circular economy, ecological and economical aspects are equally important as the social aspect.

8. Knowledge

Knowledge and science is an important domain within the circular economy. Currently learning by doing (design science) is one of the main ways in which circular models, processes and products are created. It is not found to be easy to make the entire leap to a fully circular economy at once. Every step made is one closer to what people aim for, and the knowledge gained from each of these steps is found to be very important. But to keep development going and quicken the transition to a circular society, all knowledge that is developed should be shared with other practitioners. Only that way entire value and supply chains can work together in the same direction.

What about water usage?

A last domain that often is being named is water usage. The use of fresh water is often explicitly measured in discussions on sustainability because alike energy, fresh water is a scarce resource in large parts of the world. A resource that is essential for production of many different products shipped to the West. But it is just as essential for sustaining local ecosystems. By taking water usage separately, our impact in these regions can be made more explicit. However, I would plead to take fresh water usage initially together with the general resource usage because there are many other resources that are essential and scarce. For example phosphates and nitrates. Eventually all materials are scarce on this Earth, some more than others, but in the light of the discussion we can’t keep focussing on all these resources separately. They should all be taken care of.

Measuring Circularity

Depending on your perspective and motives, you goals and therefore KPI’s will differ. With that, measuring circularity, or circular performance, also differs for everyone. From a resource perspective, measuring circularity will be very different from an economic perspective, or if your aim is to include social impact. Because of the many different takes on the circular economy, there is a large variety of indicator sets to be found. The graph below shows which domains are most common within these indicator sets.

Categories Indicator systems

Presence of various circular economy categories within indicator sets.

Measuring circularity is therefore a complex topic and not always unambiguous. More than enough to write about for a next blog post!

10 Enablers of the Circular Economy

Het bewerkstelligen van de circulaire economie vereist verschillende veranderingen in tal van sectoren en processen. Omdat veel ontwikkelingen in die sectoren en processen onderling afhankelijk, is de circulaire economie een omvangrijke uitdaging. Dat maakt elk van deze ontwikkelingen net zo belangrijk. Hieronder zijn de verschillende enablers genoemd waarin minimaal ontwikkelingen of veranderingen nodig zijn om een inclusieve circulaire economie teweeg te brengen.

supply-chain

1. Design

Om producten en diensten passend te maken binnen het circulaire model zullen deze moeten worden herontworpen. De ontwerpen moeten zich met name richten op de niveaus van circulariteit door middel van levensduurverlenging, design for reuse, disassembly en recycling. Designers moeten daarbij rekening houden met alle fases van de levenscyclus afhankelijk van het business model: productie, transport en retail, gebruik en teruggave of afdanken. Bij de productie kunnen al veel keuzes worden gemaakt: welk materiaal en waar komt dit vandaan (maagdelijk of gerecycled), afstemmen op levensduur, welke bewerkingen en afwerking is nodig, hoe moet het verpakt worden met betrekking tot transport, welk onderhoud moet eraan gepleegd kunnen worden en wat gaat er met het product gebeuren na het eerste gebruik, en wat na het tweede?

2. Asset management

Asset management gaat over het fysieke deel van het beheer van producten en daarmee de grondstoffen die ermee gemoeid zijn. Een goed ingericht asset management ondersteund de niveaus van circulariteit tijdens de gebruiksfase. Hiermee kan er gemanaged worden op optimaal waardebehoud. Asset Management gaat namelijk over inkoop (soms deels), onderhoud en uitfasering van asset (machines of producten) uit de bedrijfsvoering. Bij investeringen wordt hierbij vaak gestuurd op kostenefficiëntie, maar voor veel bedrijven met grote kapitaalgoederen zoals fabrieken en infrastructuurbedrijven zijn ook andere elementen van belang: de RAMSHEEP (Reliability, Availability, Maintainability, Supportability, Health, Environment en Economics).

3. Ketenintegratie

Ketenintegratie is belangrijk in de circulaire economie omdat keuzes met betrekking materiaal, assemblage en verwerking verderop in de keten grote impact op de circulariteit van een product kan hebben. En andersom ook. Als een inkoper kiest voor een bepaald alternatief op basis van zeer nauwe specificaties kan dit eerder in de keten een negatief effect hebben op de materialen en productietechnieken die worden gebruikt. Toch zijn de meeste effecten te vinden aan het einde in de vorm van herbruikbaarheid, demontage en afvalscheiding. Daardoor kan het voor de volledige keten soms beter zijn om een schijnbaar minder ideale oplossing eerder in de keten te kiezen. Bijvoorbeeld doordat er extra geïnvesteerd wordt in een demontabel product kan dit terugverdiend worden in de onderhoudsfase en de winst worden behaald in tijdens de afdanking doordat materialen een hogere waarde behouden. Als de keten beter op elkaar inspeelt kan de waarde winst worden verdeeld waardoor de extra investering aantrekkelijk wordt.

4. Logistiek

Logistiek, en met name ‘reverse logistics’ en de ‘last mile’ zijn belangrijke elementen in de circulaire economie. Om materialen zo hoogwaardig te kunnen behouden zijn effectieve en efficiënte logistieke stromen nodig. Fijnmazigheid en de retourstromen zijn hiervoor van belang. De transport-component van logistiek is op verschillende manieren belastend. Waar nu simpele en vaak korte retourstromen door afvalverwerkers worden afgehandeld vereisen verschillende business modellen in de circulaire economie retourlogistiek van het oude product naar hun producent. Hiervoor moet de huidige eenrichtingslogistiek van producent naar consument verdubbeld worden om tweerichtingsverkeer aan te kunnen. Dit houdt in dat er slimmer met transport moet worden gewerkt. Met name in steden is de verwachting dat het aantal bestelbusjes hierdoor explosief zou kunnen groeien wat met betrekking tot mobiliteit en luchtkwaliteit niet gewenst is.

5. Business modellen

Nieuwe business modellen zijn evident nodig om mogelijke extra kosten financieel interessant te kunnen houden, maar ook kunnen er nieuwe business modellen die extra inkomsten genereren doordat nieuwe diensten worden aangeboden. Aloude bekende modellen zijn verhuur en leasing. In het verdiensten van producten (product-services) wordt een grote groei verwacht. Kopen we nu nog lampen en auto’s, kopen we straks lichturen en kilometers reiscomfort. Hierbij staat de producent garant voor dat het licht het altijd doet en daarbij voor alle randvoorwaarden zorgt en betaald (fitting, behuizing, energieverbruik). Niet alleen producent-consument verhoudingen kunnen door nieuwe modellen veranderen, maar ook de verhouding in business-to-business. Bijvoorbeeld doordat het eigenaarschap van grondstoffen niet meer overgaan van business naar business, maar dat één enkele partij de regie voert in een keten door eigenaar te blijven van de materialen en andere partijen in de keten alleen nog maar een dienst leveren. Denk hier bijvoorbeeld aan netbeheerders die eigenaar blijven van al het koper in de kabels. Aan het einde van de levensduur laten de netbeheerders de kabels versmelten tot nieuw bruikbaar koper en geven dit koper dan weer in bruikleen aan een fabriek die er nieuwe kabels van maakt voor die netbeheerder Het versmelten en het produceren van kabels is daarmee een dienst geworden. Het voordeel hiervan is dat de prijs van koper uit de keten gehaald kan worden en daarmee fluctuaties van de prijs vanwege de grondstoffenmarkt.

6. Open data

Om efficiënt ketens met elkaar te laten integreren en verschillende ketens op elkaar te kunnen laten inhaken is het van belang om vraag en aanbod op elkaar te kunnen afstemmen. Dat moet in complexe ketens continue plaats vinden. Het gebruik van open data om uitwisseling van deze gegevens mogelijk te maken is daarvoor essentieel. Ook om op kleinere schaal grondstoffenmatching efficiënt van de grond te krijgen is het van belang dat het inzichtelijk wordt wanneer welke materialen vrijkomen. Door dit slim op te zetten kan er bijvoorbeeld minder transport nodig zijn en zijn ook kortere en efficiëntere ketens mogelijk.

7. Financiën

Inkoop, aanbesteding en investeringen zijn nodig om bedrijven de ruimte te geven de veranderingen door te maken die nodig zijn. Middels inkoop en aanbesteding kunnen aanbieders én aangespoord worden om circulaire oplossingen aan te bieden en daarbij zekerheid hebben dat het wordt afgenomen. Inkoop is daarmee een manier om deze beweging aan te jagen. Investeringen zijn vooral nodig voor het opzetten van nieuwe installaties en processen van technologie die zich in de praktijk nog niet bewezen heeft.

Een ander element met financiën is de manier van waarde bepaling in de boeken. Aankopen worden bijna altijd tot nul afgeschreven over een bepaalde periode. Dat is eigenlijk heel raar. Al die producten hebben nog een restwaarde die, indien op de juiste manier, gemakkelijk teruggewonnen kan worden. Daarmee kunnen kapitale goederen die waardevolle grondstoffen bevatten en die lang mee gaan zichzelf zelfs terugverdienen. Het principe erachter is dat een product niet meer alleen wordt gezien als een object dat een bepaalde functie vervuld maar tegelijkertijd ook een grondstoffenbank is.

8. Living Labs

Hoe nieuwe processen, diensten en producten in de circulaire economie vormgegeven moeten worden is nog niet uitgekristalliseerd. Om ideeën te kunnen testen zijn experimenten nodig, vaak dusdanig dat er schaalgrootte gehaald wordt. Hiervoor zijn proeftuinen of living labs zeer geschikt. Deze worden steeds meer ingezet door overheden in samenwerking met bedrijfsleven, kennisinstellingen en soms ook burgers. Deze living labs kunnen niet alleen waardevolle kennis opleveren maar ook voldoende vraag creëren waarmee bedrijven hun business case rond krijgen. Vaak worden living labs vanuit een bepaald aspect opgezet: technologie, een maatschappelijk probleem, een economische uitdaging. Een goed living lab doet dit uit al deze invalshoeken. Met betrekking tot Smart City living labs wordt dit vaak alleen vanuit technologie opgezet en wordt daarmee de impact en de afhankelijkheid van de samenleving onderschat. Een ander probleem met betrekking tot living labs is dat deze opgezet kunnen worden zonder aan specifieke ethische of andere voorwaarden moeten voldoen die het belang van bijvoorbeeld inwoners waarborgt. Zo weten mensen vaak niet dat ze onderdeel zijn van een experiment en wordt de privacy nogal eens geschonden.

9. Wet en regelgeving

Tot slot is het een belangrijke voorwaarde dat de wet en regelgeving goed afgestemd te is op de vernieuwingsslagen die nodig zijn in alle voorgaande enablers. Van ontwerpen die gebruik mogen maken van gerecycled materiaal, het toestaan van nieuwe business modellen, tot het mogelijk maken van experimenten op onconventionele manieren. Vaak wordt dit punt aangehaald als een van de barrières. Toch is het maar de vraag of dat zo is. Vaak is het alleen nodig om de wet of regelgeving iets anders te interpreteren dan we nu doen, zijn er bijna altijd uitzondering- of experimenteermogelijkheden mogelijk. Wat wel kan is stimulerende wet en regelgeving waarin een voorkeur voor een bepaalde technologie of manier van werken zit middels financiële voordelen bijvoorbeeld.

10. Consumenten gedrag

Niet in de laatste plaats is cultuur een belangrijke enabler en eentje die vaak vergeten wordt. Het is ook misschien de meest ongrijpbare, maar wel een waar verandering in moet, maar ook grotendeels vanzelf zal plaats vinden. Cultuur veranderd namelijk continue zoals de ontwikkeling van waarden en normen. De cultuurverandering zit met name in veranderende waardebepaling, consumentengedrag en sociale bewustwording. Bijvoorbeeld de waarde die aan eigendom versus beschikbaarheid wordt toegekend, de sociale bewustwording rond voedsel en energieverspilling, en de gevolgen hiervan voor het consumentengedrag welke een andere vraag zal teweegbrengen.

10 Enablers of the Circular Economy

To make our economy a bit more circular, many sectors will need to adapt and change. Since, many developments in these sectors and processes interdependent, the road to a circular economy is a major challenge. That makes each of these developments equally important. Below are various enablers mentioned in which, at least some, developments or changes are needed to bring about an inclusive circular economy.

supply-chain

1. Design

To create appropriate products and services within the circular model, they will have to be redesigned. The designs should focus in particular on levels of circularity through product life extension, design for reuse, disassembly and recycling. Designers should take into account all phases of the life cycle depends on the business model: production, transport and retail, use and return or discard. During production various choices can be made: what material should be use and where did this come from (virgin or recycled), match life expectancy and planned obsolescence, which production processes and coatings are required, how should it be packaged with respect to transportation, what maintenance should be carried out and what’s going to happen to the product after the first use, and what after the second use?

2. Asset management

Physical asset management is about the management of products and machinery. More specifically, it considers the purchasing (sometimes partially), maintenance and phasing out of an asset from operations. When investing in new assets, the focus is often on cost efficiency, but for many companies with large capital goods such as factories and infrastructure companies are also other elements are important: the RAMSHEEP (Reliability, Availability, Maintainability, Supportability, Health, Environment and Economics).

From a circularity point of view asset management is even more: it also includes the management of the raw materials and resources that are contained in or used by the assets. A well-designed asset management supports the levels of circularity during the use phase. Especially by managing for optimal value preservation.

3.Chain integration

Chain integration is important in the circular economy as choices concerning material, assembly and processing can have a large impact on the circularity performance of all supply chain partners. When a purchaser selects a certain alternative on the basis of very narrow specifications, this can have a negative effect on the materials and production techniques higher up in the chain. However, most effects are generally accumulated at the end of the chain because reusability, disassembly and sorting become difficult. As a result, it may sometimes be better for the entire chain to choose an apparently less ideal solution higher up in the chain. For example, because additional investments are made in the design and production to allow disassembly of a product, maintenance will be easier and cheaper extending the life span of a product. Also the discarded product may yield a larger profit during recycling. If the total gains of such investment are to be returned to all involved partners, the additional investment may become attractive.

4. Logistics

Logistics, and in particular ‘reverse logistics’ and ‘last mile’ are important elements in the circular economy. To keep materials at their highest quality, effective and efficient logistics flows are required. Highly meshed logistics and return flows are important aspects in that respect. The transport component of logistics is burdensome in various ways. In the current system, simple and often short return flows are handled by waste processors as they are located relatively close to the consumer. But in the circular economy, various business models require reverse logistics from consumer back to the manufacturer.

The current one-way logistics from producer to consumer should be doubled for two-way traffic. This means that there are smarter with transport needs to be worked. Especially in cities, it is expected that the number of vans, as it could grow explosively thing regarding mobility and air quality is not desirable.

5. Business models

New business models are evidently needed to keep financially interesting possible additional costs, but also new business models that generate additional revenue as new services are offered. Ancient known models are rental and leasing. The merits of products (Product Services), a large growth is expected. Buy we are still lights and cars, we’ll be buying light hours and kilometers of travel comfort. Here, the producer guarantees that the light always does and thereby creates and paid for all conditions (fitting, housing, energy consumption). Not only producer-consumer relationships can change by new models, but also the relationship in business-to-business. For example, because the ownership of raw materials no longer proceed from business to business, but that a single party is responsible for coordinating in a chain by retaining ownership of the materials and other parties in the chain only provide a service. Such as where network operators that remain from all the brass owner in the cables. At the end of life leave the grid cables merge into new usable buyer and give this buyer then loaned to a factory that makes new cables for the network operator, the melt and producing cables has become a service. The advantage is that the price of copper can be removed from the chain and thus fluctuations in price due to the commodity market.

6. Open data

To efficiently chains with each other and integrate different chains be able to pick up on each other, it is important to balance supply and demand can match. That must take place continuously in complex chains. The use of open data to facilitate exchange of data is essential. Also, in order to get on a smaller scale matching efficient raw materials of the ground, it is important that it is clear when to use which release materials. Through this clever set up might perhaps less transport are needed and are also shorter and more efficient chain possible.

7. Finances

Purchasing, procurement and investment are needed to make companies give the room the changes that are needed. Through sourcing and procurement providers may well be encouraged to provide circular solutions and thereby be certain that it is taken. Procurement is therefore a way to boost this movement. Investment is especially needed for the setting up of new plants and process technology that in practice has not yet been proven.

Another element of finance is the way of value determination in the books. Purchases are almost always written down to zero over a period of time. That’s actually quite strange. All of these products still have a residual value which, if in the proper way, can be easily recovered. This allows capital goods which contain valuable raw materials that last go even pay for themselves. The principle behind it is that a product is not only seen as objects that played a particular function, but at the same time is a resource bank.

8. Living Labs

How new processes, services and products should be designed in circular economy has not yet crystallized. Ideas need to be able to test his experiments, often so that is achieved scale. For this pilot or living labs are great. These are increasingly being used by governments in collaboration with industry, universities and sometimes also civilians. This living labs can not only provide valuable knowledge but also to create sufficient demand that companies get around their business case. Often living labs set up from a certain aspect: technology, a social problem, an economic challenge. A good living lab does so from all these perspectives. Regarding SmartCity living labs is often only developed from technology and thus underestimated the impact and dependence on society. Another problem related to living labs is that they can be developed without having to meet specific ethical or other conditions that guarantees the interests of for instance people. So people often do not know that they are part of an experiment and privacy is often violated.

9. Regulation and policy making

It is also good tune with laws and regulations is an important condition to trigger the renovation strokes required in previous enablers. Designs that may make use of recycled materials, allowing new business models, to allow experiments in unconventional ways. Often, this point is referred to as one of the barriers. Yet it is questionable whether this is so. Often it is only necessary to interpret some law or regulation differently than we do now, there are almost always exception- and experimentation capabilities possible. What is possible is stimulating laws and regulations establishing a preference for a particular technology or way of working is through financial benefits for example.

10. Consumer behavior

Not least, culture is a key enabler and one that is often forgotten. It is also perhaps the most elusive, but a true change in need, but also will take place largely automatically. Namely culture changed continuously as the development of values ​​and norms. The culture is changing in particular valuation, consumer behavior and social awareness. For example, the value assigned to property versus availability, social awareness around food and energy waste, and its impact on consumer behavior which will trigger another question.

A hype of economic paradigms!?

In recent years various economic paradigms have come by. Some are more concepts and fit within our current economic model, others aim for a transition to a new status quo. Why are so many paradigms emerging, are they just a hype, are they truly new economic systems or have they become a container concept for everything that should be done to fix the problems of our current economy.

Before answering those question, this blog post is an inventory of the various paradigms, a quick explanation, and if known, their origins. In a previous post on the resource hierarchy I have linked these paradigms to this waste ladder.

Circular Economy

Circular Economy iconPearce and Turner were the first to mention the phrase Circular Economy in their book “Economics of Natural Resources and the Environment” published in 1990. By now the definition of the Circular Economy has been largely shaped by the Ellen MacArthur Foundation. However, scientific research is still lacking on what it actually is and what its implications are. Therefore various perspectives exist and are propagated. The most common ground found between various perspectives is that in a circular economy resources are used to last (no planned obsolescence), do not become obsolete (means of reuse and recycling), nor are they destroyed or leaked (incineration and land fill). The circular economy considers both technical and biological resource cycles and therefore the full waste hierarchy.

Bio-based Economy

Biobased Economy iconIn 1997 Enriquez and Martinez first mentioned the concept of a bio-based economy in a paper on genomics and the world economy. The bio-based economy is one that is based upon biological materials that can be composted and act as feedstock for the growth of new crops. It is often seen as one side of the circular economy and closely related to the food waste scale (Moerman hierarchy). A common issue with the bio-based economy is the competition of land use for production of food and the production of feedstock for other purposes (ie bio-oil for mixing with gasoline, or production of bioplastics). The way to solve this is to use only those parts of the plant that cannot be used as food for human or animal. A second problem that may occur that if all biological material is used for economic activities (food and chemical processing) all natural fall-off of plants will not be able to enrich the soil, possibly leading to top-soil degradation.

Green Economy

GreenEconomy iconThe green economy is one that reduces environmental risks and use of resources thereby supporting environmental recovery and development while growth is still possible. Social equity is also important as the green economy should be inclusive. A very distinctive profile from the circular economy or ecological economy is not present. However, valuation of natural capital and ecological services is a key element. That is also its weakness as valuation of systems that we do not fully understand (ecosystems and even social systems) is very difficult. Valuing it in monetary terms does not do justice to them and allows room for calculating economic trade-offs. That may cause problems as damage done to natural capital cannot be restored or is even irreversible.

Blue Economy

Blue Economy iconThe blue economy emerged as idea from the “Nature’s 100 Best” UNEP project to find ways for a new sustainable economy. Gunter Pauli became its philosophical father of the idea and promoted it. The blue economy is about adding more value beside revenues for business and societies. New business models use all available resources, cluster activities and cascade to higher levels of efficiency. It is based upon 6 main principles: local sourcing, efficiency, systemic (mimic nature), profitable (generate multiple cash flows), abundant (satisfy all basic needs), innovative. These are not very distinctive principles in relation to the other economic paradigms on this page. The focus in many blue economy best practices is on the biological side of the economy and cascaded use of resources.

Ecological Economy

Ecological Economy iconAn ecological economy is about the balance between all ecological systems in relation to the economy, it is the linkage between two different academic fields. Next to that it looks at this linkage from other academic perspectives as well: from a psychological, anthropological, archaeological and historical perspective. Because it is the human factor that lets the economy run and interact with the ecological spheres (hydrosphere, biosphere, lithosphere and atmosphere). Each of these spheres have their own historical context far beyond mankind existed. Taking these perspectives into account allows us better value the impacts of current ecological or economical developments. Important within the ecological economy are the interactions between each of the spheres, their regenerative capacity and their sink function.

Performance Economy

Performance Economy iconThe performance economy was introduced by Walter Stahel, who also plays a part in the historic development of the Circular Economy, in his book the Performance Economy. Basically it is about a shift from ownership to usage. Access to services is more important than ownership of products and capital. For example Light-as-a-Service in which you buy light and don’t have to worry about bulbs, electricity bills and other requirements. The producers takes care of that. The idea is that this gives an incentive to the producers to make their products last longer, more energy efficient and suitable for reuse and recycling. Their profit is more security of income over time and the possibility to control their flow of raw materials avoiding price fluctuations.

The performance economy is not a new phenomena. The good old library is a perfect example of a product based service that fits in this theory: offer the performance to read without the ownership. Also sharing, renting and leasing are business models that fit within the idea of a performance economy. That is why the Leasing Economy and Sharing Economy are also economic paradigms that are often mentioned. The Leasing Economy as described by Judith Merkies is rather similar to the performance economy so I won’t get into that. The Sharing economy has some distinctive features that I’ll discuss right below.

Sharing Economy

Sharing Economy iconThe sharing economy, is very much similar to the performance economy except that it is a “service contract” between consumers instead of producer-consumer. It therefore also focusses on access and services instead of ownership. However, ownership of a product is still needed to be able to share. However, not every individual needs to own the same product. These goods are shared among the public, often through platforms. This sharing causing products to become services, but unlike the performance economy sharing contracts are often only temporarily. True sharing-economy services are non-profit. Common problems of the sharing economy is liability and risk management. Who is responsible and who pays, that requires new forms of insurance and possibly legislation as well.

Gig Economy

GigEconomy iconThe gig economy is also a performance based paradigm, currently gaining attention in the US. It differs from the performance economy in the way that it is about temporarily performance. It focusses especially short service (contracts) created by independent professionals or short usage of products. Platforms like Uber, HomeAdvisor and Peerby let people access these “gigs”. Obviously not everything can be turned into a gig, and so the entire economy will not become a gig economy, but it could become a large subeconomy or eventually a specific economic sector.

Smart Economy

Smart Economy iconThe concept of a smart economy is an economy in which technology supports economic choices. For example the use of open data and the internet of things to streamline economic activities, innovation and resource flows in combination with new business models. It is seen as one of the elements of a Smart City, just as smart governance, smart environment, smart living and smart environment. Within this economy new technologies are seen as a driver and solution to socio-economic challenges and enablers for new growth. Important within a smart economy is the digital infrastructure for the internet of things and the access of open data.

Next or New Economy

Next Economy iconTwo similar paradigms are also gaining attention in the last two years. Especially in the Netherlands where Jeremy Rifkin is developing a road map for a Next Economy for the Rotterdam Region and Marga Hoek who wrote a management book on New Economy Business. The idea of the next and new economy is that it is value enriching, low-carbon, is continuous innovative, disruptive, opportunity rich and export-oriented. In this economy new business models and technologies are developed to break away from current practices in all sectors. Similar to the smart economy is is are the necessities of new infrastructures and networks to enable disruptive changes in supply and demand.

A hype or a true future economy?

The above “economic paradigms”are not the only ones that get much attention. Others are the plastic economy, the network economy and so on. In general they seem to be a names for a new way of thinking and organising some or most economic activities. Whether these are true economies on their own can be doubted. For example not the entire economy will become a sharing or performance economy: some people or organisations will still own products. It is likely though that there will be a shift from current economic practices towards these. And most of them overlap or can coexist. The smart economy and the circular economy work very well together, and maybe that is close to what is meant with a new economy. In that perspectives, these “economic paradigms” seem to be more names for trends that are observed within our economy: technology is becoming more important just as sustainability. And to comprehend these trends we tend to contain them in a single phrase. Right now that is an economic paradigm with an adjective.

The question is however whether naming them an economy is a good practice. It seems to reduce these trends to a financial model only while it also has social and environmental impacts. The ecological economy is maybe the one that explicitly tries to link those other fields to each other based on scientific studies. Other paradigms have predecessors such as the Circular Economy had Cradle to Cradle and Industrial Ecology. Those predecessors hyped for a couple of years and so might these current economic paradigms hype as well.

Let’s find out in five or ten years. One certainty: as long as humans will exist there will always be some form of economy, with or without an adjective.

An extensive history of the Circular Economy

Even though there is no clear moment in time when the Circular Economy came into being, we can describe the history of related paradigms and ways of thinking that led to our current understanding of the Circular Economy. Circularity and Circular Economy thinking is based on various sustainability principles and paradigms. People often refer to Industrial Ecology, the Performance Economy, Cradle to Cradle and several other ideas of scholars and organisations pursuing sustainability or seeking new business models. Understanding the history of various events and the paradigms may help to develop a more comprehensive view on the Circular Economy.

The Earth rising from the face of the moon seen from the Apollo 8 mission

Earthrise – 1968. Photo taken by William A. Anders/NASA

The Industrial Ecology paradigm took off in the 1960s, a decade that was highly influenced by the space exploration ambitions. The first images of Earth from space were taken in these years and are claimed to have influenced mankind’s  awareness of Earth’s fragility. It was also in this decade in which several books and reports supporting the idea of Industrial Ecology, referred to the Earth as a finite spaceship. For example, in 1966 Boulding wrote an essay titled “the Economics of the Coming Spaceship Earth”  and two years later architect Buckminster Fuller wrote a book called “Operating Manual for Spaceship Earth”. Boulding mainly indicated in his essay that the economy should be looked at from a different perspective as the current economic system doesn’t take into account the limited number of material resources. Fuller did not only describe the challenges like Boulding did, but also gave guidelines as how mankind should take care of the Earth such as by using only our daily energy income.

A decade later, in 1977, Stahel and Reday-Mulvey wrote a report to the Commission for the European Communities1)The European Communities was the predecessor of the European Union and existed from 1967 until 2002. called “The Potential for Substituting Manpower for Energy”. In this report they reason that due to limited resources manpower will be favourable over machines since machines use energy generated from these limited resources. Besides, promoting manpower over machines helps to prevent emissions and create new jobs. They suggest setting this transition in motion by introducing recycling and reconditioning into the industry. This report is not so much based on the material efficiency but focuses more on energy efficiency, an important topic in the 1970s due to the energy crisis.

Stahel and Reday-Mulvey introduce reconditioning and recycling loops, replacing the traditional production-use-disposal pattern. [157]

Stahel and Reday-Mulvey introduce reconditioning and recycling loops, replacing the traditional production-use-disposal pattern.

Whether manpower should be substituted for energy in the future has become more debatable due to growing use of renewable energy resources which takes away one of the main reasons Stahel and Reday-Mulvey put forward as energy used by machines may become fully renewable and unlimited in the future.  The socio-economic argument of job generation for their reconditioning and recycling system remains uncertain due to continuing trends of work week reduction and automation of labour intensive jobs such as sorting out products or waste separation. However, current projects like the Ex’tax project still aim to reduce the tax on labour and increase tax on resources, secondary in favour of job creation but mainly to promote resource efficiency and services instead of consumption of products.

model - circular economy ext - pearce and turner

Circular Economy model as developed by Pearce and Turner. The solid lines are flows of material and energy, the dashed lines are utility flows.

Up till now, the term circular economy had not been used. Only in the nineties Pearce and Turner introduced it in their book “Economics of Natural Resources and the Environment”. The Brundtland commission had written their report, “Our Common Future” on sustainable development just three years earlier when Pearce and Turner developed the first fully closed circular model. They based it on Boulding’s conclusion that the Earth is the system boundary of our economy with negligible amounts of matter exchanges across that system boundary. The second law of thermodynamics also inspired Pearce and Turner in their fundamental premise by stating that the economy is a process that increases the entropy2)measure of disorder, systems naturally progress from order to disorder of materials. This would mean that a larger turnover within the economy (a measure for economic growth) increases the rate at which entropy increases. Nature and other ecological systems on Earth are in a process of locally decreasing entropy with help of (external) solar energy.

[pullquote align=”full” cite=”Brundtland Commission” link=”” color=”” class=”” size=””]Sustainable development is development that
meets the needs of the present
without compromising the ability of future generations
to meet their own needs.[/pullquote]

It is striking that Pearce’s model includes a welfare factor (utility), being one of the first to identify and embed social aspects within the paradigm and not just money or jobs. Their approach comes close to what the Brundtland commission identified as key concepts for sustainability in 1987 considering limitations of our Earth’s resources and secondly the social impact or equity which, in be Pearce and Turners model would be the utility factor. Pearce and Turner state that consumption and resource contribute to welfare, while too much waste (the waste exceeds the assimilative capacity of the environment) has a negative amenity and hence reduces welfare and limits future generations.

After the turn of the millennium, the Circular Economy gained attention in China especially due to the fact that China’s economic growth has correlated to the amount of resources used. To avoid future problems of scarce materials, China wanted to decouple economic growth from their consumption and pollution and hence move to a more sustainable economic structure. Because of this China implemented a thorough set of regulations in a previous five-year plan to make the Circular Economy a national strategy. Their main focus of most of  these regulations are to keep the materials flow in cycles. Chinese scholars generally refer to this method as 3R, being an abbreviation for implementing reduce, reuse and recycle.

Dajian - China CE

China’s Circular Economy multi-cycling of materials based on 3R and including maintenance

China tries to implement this paradigm not just at product or company level but at several higher of the economy. For example by developing eco-industrial parks and even eco-industrial networks on the regional level and with that including entire product, material and energy chains.

In the last few years the Circular Economy is gaining momentum in Europe. The reasoning to implement the Circular Economy is not always consistent, however it is often focused on financial benefits and job creation. These are supposed to be achieved through new business models that would push for waste reduction, resource efficiency and other environmental gains. The resource efficiency is supposed to have a direct effect on reducing costs while new business models often encompass services throughout the life cycle of a product. These are supposed to create a more continuous income over the life cycle of the product spreading but increasing turnover as well as requiring more jobs to manage these new services.

Depiction of the Circular Economy by the Ellen MacArthur Foundation

Depiction of the Circular Economy by the Ellen MacArthur Foundation

In 2002, the Ellen MacArthur Foundation published its first report on the Circular Economy that included one of the most widely used diagrams of the Circular Economy (the one above). The Ellen MacArhtur Foundation states that it is inspired on various schools of thought such as Cradle to Cradle, Industrial Ecology, Blue Economy and Biomimicry. The diagram clearly distinguishes between two material cycles: the bio-based (green) and the technical (blue) sphere. Next to that it includes the principle of cascaded usage and the waste hierarchy. One of the criticisms to this diagram is that is still includes a form of leakage of materials from the economy through incineration and land fill.

In the last few years the Circular Economy idea is spreading around the world. From the South America’s, South Africa and Australia. This seems to be diversifying the number of interpretations on the paradigm. Especially because governments and other policy-makers see the premise of the Circular Economy as an opportunity to tackle local socio-economic issues.

The latest development on policy-making side is the presentation of the EU Circular Economy package in December 2016. It is a package that contains an action plan and legislative changes. The legislative changes mainly focus on waste management3)based on EU waste hierarchy while the action plan also includes production and consumption elements. Right now the EU’s presidency of the Netherlands uses this Circular Economy package to promote the developments in the Netherlands such as Netherlands Circular Hotspot.

Scientific development and discussions on the concept, definition and principles could get some more attention if so many governments are basing their policies on it, companies their sustainability strategies and consumers their purchases.


NB. This blog post is largely based on my thesis. You can find it here, also for a full list of the references.

Boulding, K. E., 1966, The economics of the coming spaceship earth, in Environmental Quality in a Growing Economy, pp. 3–14.
Buckminster Fuller, R., 1969, Operating Manual for Spaceship Earth, 2013th ed. Lars Müller Publishers.
Dajian, Z., 2008, Background, Pattern and Policy of China for Developing Circular Economy, Chinese Journal of Population Resources
Ellen MacArthur Foundation, 2012, Towards the Circular Economy Economic and business rationale for an accelerated transition, Ellen MacArthur Foundation.
Harlem Brundtland, G., Khalid, M., Agnelli, S., Al-Athel, S. A., Gonzalez Casanova, P., et al., 1987, Our Common Future.
Pearce, D. W., Turner, R. K., 1990, Economics of natural resources and the environment, 1st ed. Hertfordshire: Harvester Wheatsheaf.
Stahel, W. R., Reday-Mulvey, G., 1977, The Potential for Substituting Manpower for Energy, Brussels.
Turner, R. K., Pearce, D. W., Bateman, I., 1993, Environmental economics An elementary introduction. Baltimore: Johns Hopkins University Press.

References   [ + ]

1. The European Communities was the predecessor of the European Union and existed from 1967 until 2002.
2. measure of disorder, systems naturally progress from order to disorder
3. based on EU waste hierarchy

Risico’s van de Circulaire Economie

De Circulaire Economie wordt in inmiddels door velen gezien als de heilige graal gezien voor een toekomstbestendige economie. Miljarden euro’s aan kostenreductie en de creatie van tienduizenden banen worden er aan toegekend. Ook het Circulaire Economie plan van de Europese Commissie spreekt van deze mooie kansen. Deze zullen er zeker zijn, maar helaas gaat het zelden over de risico’s.

Als men over de risico’s praat, dan gaat het eigenlijk meestal over de uitdagingen voor bedrijven met betrekking tot de implementatie. En dat zijn dan uitdagingen waarvoor de oplossingen al bedacht zijn door de vele adviesbureaus die zich de circulaire economie eigen hebben gemaakt. MVO Nederland, maar ook bijvoorbeeld Arcadis, noemen een aantal van deze uitdagingen onder het kopje risico:

[pullquote align=”full” cite=”MVO Nederland” link=”http://mvonederland.nl/circulaire-economie/kansen-voor-uw-bedrijf” color=”” class=”” size=”14″]

RISICO’S
  • De circulaire economie vergt een radicale aanpassing van de productie, gebruik en verwerking van producten. Bedrijven zullen zowel bedrijfsprocessen als –modellen stevig moeten veranderen, zonder garantie op succes. Daarvoor is (persoonlijk) leiderschap, kennis, tijd, geld, draagvlak en samenwerking nodig.
  • Het is nog geen bedrijf gelukt om daadwerkelijk alle grondstoffen van een product zonder kwaliteitsverlies terug te brengen in de keten. Sommige producten zijn wel gemaakt om hergebruikt te worden, maar het blijkt financieel en logistiek gezien (nog) lastig om de producten terug te halen na de gebruiksfase (omgekeerde distributie).

[/pullquote]

[pullquote align=”full” cite=”Arcadis, Freek Wullink” link=”http://www.arcadisblog.nl/2015/11/googelen-en-goochelen-met-de-circulaire-economie-2/” color=”” class=”” size=”14″]Er bestaat echter het gevaar dat we ons blind staren op een enkele supply chain; een grondstof hoeft namelijk niet per definitie teruggeleid te worden naar de supply chain waaruit deze is gevloeid.[/pullquote]

Over echte fundamentele systeemrisico’s gaat het niet of nauwelijks. MVO Nederland raakt op sommige punten wel aan mogelijke systeemrisico’s zoals averechtse effecten van bepaalde “nieuwe” business modellen waarin vaak wordt verwezen, of de sociale impact die de technische push veroorzaakt:

[pullquote align=”full” cite=”MVO Nederland” link=”http://mvonederland.nl/circulaire-economie/kansen-voor-uw-bedrijf” color=”” class=”” size=”14″]

  • De circulaire economie kan consumenten de motivatie ontnemen om zuinig om te gaan met hun spullen. Als de producten veel energie gebruiken, kapot gaan of gestolen worden, krijgen ze immers toch een nieuw exemplaar.
  • Een te nauwe focus op de benodigde technische innovatie leidt de aandacht en middelen af waar deze echt nodig zijn; bij de sociale innovatie. Nieuwe samenwerkingsvormen, beloningsstructuren en verdienmodellen zijn de werkelijke kernaspecten van de circulaire economie.

[/pullquote]

Hieronder noem ik vier systeemrisico’s van de circulaire economie die ik nu kan voorzien: too big too fail, een grondstoffenbubbel, ecologische armoede en mogelijke machtsverschuivingen.

1. Too big to fail

Af en toe heb ik het gevoel dat er Babylonische spraakverwarringen aan het optreden zijn als het over de Circulaire Economie gaat. Spreken we wel dezelfde taal? Er zijn namelijk tal van opvattingen en definities te vinden.

Er zijn inmiddels overheidsrichtlijnen en wetten in voorbereiding die de Circulaire Economie willen bevorderen. Maar de Circulaire Economie bestaat niet. Hoewel het idee al sinds de jaren 70 bestaat is de uitwerking van de mogelijke principes nog maar nauwelijks te bevatten. Met name in een tijd waarin mineralen wereldwijd verhandeld worden, grondstoffen schaars worden, technologie enorme vooruitgang boekt, nieuwe ontwrichtende business modellen worden ontwikkeld, en het belang van ecologische systemen en het klimaat nog maar net algemeen geaccepteerd begint te raken.

Het risico? Dat we langzamerhand in een algemeen geaccepteerd systeem rollen waarvan we de derivaten, afhankelijkheden niet meer kunnen zien. Herkenbaar met de crisis waar we net uit aan het opkrabbelen zijn. Vooral als het gaat over het voldoen aan onze fysiek behoeftes (voedsel, huisvesting, gezondheid en mobiliteit) moeten we voorkomen dat er organisaties ontstaan die too-big-to-fail zijn. Dat is nou juist een systeem dat niet toekomstbestendig is.

2. Grondstoffenbubbel

Een van de vele aannames in de het Circulaire Economie denken gaat om het behouden van de waarde van grondstoffen in de economie. Delen, hergebruik, refurbishing en upcyclen zijn allemaal belangrijke ingrediënten om levensduurverlenging na te streven. Hiervoor ontwikkelen nieuwe technologische processen om oude materialen te recyclen tot nieuwe met nog betere eigenschappen. Maar terwijl we dat nastreven leren we ondertussen ook dat sommige door de mens ontwikkelde materialen toch niet zo goed bleken als we ooit dachten. Asbest, CFC’s; ooit technologische hoogstandjes die op termijn problemen veroorzaken en uitgefaseerd moeten worden. Dat soort inzichten zorgen voor inherent waardeverlies ondanks dat het technisch nog zo goed gerecycled kan worden. En dat kan niet alleen ontstaan doordat ze misschien schadelijke effecten teweeg brengen, het kan ook zijn dat het langzaam weglekt in de natuur of dat er fysiek gewoon niets meer mee te doen is op den duur.

Nu er elk jaar meer en meer nieuwe synthetische materialen ontwikkeld worden is de kans dus ook groter dat er materialen tussen zitten die op den duur voor problemen gaan zorgen. Sommige van deze, in eerste instantie waardevolle materialen, zullen moeten worden afgeschreven met grote financiële consequenties tot gevolg. Oftewel, als deze grondstoffenbubbel alsmaar groter wordt dan is het risico van knappen een klap voor de economie.

3. Ecologische Armoede

Momenteel winnen we nog steeds meer grondstoffen uit de natuur (de ecologie) dan diezelfde ecologie kan “produceren” en regenereren. En om de gewonnen grondstoffen zo lang mogelijk in de economie te houden passen we nu meestal coatings toe. Want zodra grondstoffen die zich in de economie bevinden door ecologische mechanisme beïnvloed worden, zoals corrosie en rot, daalt over het algemeen de waarde. Daarnaast wordt door verschillende organisaties gesteld dat de Circulaire Economie ook ten doel heeft om grondstoffen langer in de economie te behouden, maar daardoor krijgen de ecologische ketens geen mogelijkheid om ook van deze grondstoffen gebruik te maken en mechanismes in gang te houden. We halen dus niet alleen meer grondstoffen uit de natuur dan dat zij kan produceren, maar ook haar capaciteit om te “produceren” gaat naar beneden. Met als gevolg ecologische armoede.

Een voorbeeld hiervan is de nijpende armoede van vruchtbare bodem (top-soil) die aan het ontstaan is. Doordat we steeds meer land gebruiken voor economische doeleinden is er geen ruimte meer voor planten en gedierte om de bodem levend te houden. Daarnaast wordt het gemaaide en gevallen biologisch afval, zoals gemaaid gras, gevallen bladeren en resten van geoogste gewassen geruimd en steeds vaker gebruikt voor vergisting voor de productie van “duurzame” energie. Hierdoor verdwijnen de voedingsstoffen die in het biologisch afval zaten uit de ecologische kringloop waardoor ook vanuit die kant de bodem langzaam uitput.

4. Machtsverschuivingen

Een van de redenen om over te gaan op een Circulaire Economie is de toenemende grondstoffenschaarste: we willen stabiele prijzen en niet afhankelijk zijn van onberekenbare partners. Er worden daarvoor nieuwe business modellen bedacht die dit probleem vermijden. Een zo’n model stelt voor dat bedrijven hun eigen grondstoffenbank organiseren. Door de grondstoffen in eigen beheer te houden over de gehele keten heen kan is het namelijk mogelijk om de grondstoffenprijs uit de supply chain halen. Bij elke transactie tussen ketenpartners wordt deze dus niet meer meegerekend omdat de ketenbeheerder de eigenaar blijft en alleen nog maar om de dienst vraagt van een bedrijf en niet meer het product. In Duitsland zijn er een aantal netbeheerders die hun vrijgekomen grondstoffen uit afgedankte producten niet verkopen aan de smelterij, maar “leasen” en de grondstoffen na omsmelting terugkrijgen. De smelterij is hierbij alleen nog maar een dienstverlener geworden. Ook richting de consument ontstaan er meer business modellen waarbij producten niet meer verkocht worden, maar alleen nog maar geleased. Hierdoor houden de bedrijven die de producten leasen de controle over de grondstoffen.

Doordat nog maar één partij in een supply chain eigenaar is van de grondstoffen kan er een verschuiving in afhankelijkheid ontstaan. Waar nu alle partijen onderling afhankelijk zijn van elkaar, worden ze straks grotendeels afhankelijk van de ene partij die de grondstoffen beheert. Die bepaalt mogelijk op den duur wie wel en geen toegang heeft tot de grondstoffen. Een machtspositie die sociaal-economisch niet te overzien is.

Eerlijk is eerlijk…

Deze vier risico’s zijn natuurlijk gebaseerd op hoe er nu over de circulaire economie gesproken wordt en wat mijn interpretatie daarvan is. Daarom is het misschien niet per se correct, net zo min zijn de vele andere aannames die door andere worden beschreven. Maar om een eerlijke discussie over de risico’s te kunnen laten gaan, en niet alleen maar de prachtige kansen te prediken, is het van belang dat we meer eenzelfde taal gaan spreken.

Met name als we spreken over systemen en transities die ons welzijn en welvaart in de toekomst zou moeten waarborgen. Daarbij hoort des te meer dat ideeën en concepten openbaar gedeeld en bediscussieerd kunnen worden. Maar ook dat nieuwe concepten niet klakkeloos als holy grail worden gezien. Juist voorlopers die hun brood verdienen aan de Circulaire Economie, zoals de Ellen MacArthur Foundation en Circle Economy zouden hier meer uitgesproken over mogen zijn. De noodzaak voor een verbeterd economisch systeem waarin we weg gaan van het take-make-waste principe is voor velen nu wel duidelijk. De tijd is daarom aangebroken om de nuances aan te brengen.

Risks of the Circular Economy

The Circular Economy is seen by many as the holy grail for a sustainable and future proof economy. Billions of euros of cost reductions and the creation of many new jobs are expected as a result. Also the recently published plan of the European Commission refers to these opportunities. I don’t doubt these opportunities, but what the possible risks are, is barely being discussed.

When people discuss the risks of the Circular Economy, they are generally talking about the risks for achieving the circular economy, or actually the challenges with regards to its implementation. For example, the need to radically change production, use and processing of products, the change of business cases without the guarantee for success or the challenge to fully recycle all resources without any quality loss (MVO Nederland).

Of course, these challenges can be risks for individual businesses, but they don’t pose any substantial risk to the economy or to society. And for most of these challenges solutions are already available or under development. But since we’re talking about an economic system shift from the “take-make-waste” economy to a circular one, we should also look at the systemic risks that it may bring about. Risks that do not pose a threat to individual companies but to entire sectors, cause social disruption or new environmental issues. I will discuss four systemic risks that I can foresee if some of the current ideas and trends will gain more momentum. I have called these: too big to fail, a resource bubble, ecological poverty and shifts of power.

1. Too big to fail

So now and then I have the feeling that Babylonian confusions occur when people discuss the Circular Economy. Do we speak the same language? You can find many different perspectives and definitions on the circular economy in science and on the internet.

Meanwhile, governmental policies and legislation are being developed in support of the Circular Economy. But the Circular Economy does not exist. Even though the idea exists since the seventies, the meaning, implementation and effects are only starting to emerge. Especially within an era in which minerals are  traded globally, resources become scarce, technology advances quickly, new business models are being developed and the importance of our ecological system is only starting to get acknowledged.

So what’s the risk? That we are about to roll into a generally accepted system of which the derivatives and dependencies are not incalculable. Sounds familiar? Indeed, that happend as well in the system that we are getting out of and of which the most recent crisis was its result. That was an economic system in which banks became too big to fail. And when they did fail they either went bankrupt, and many lost their savings (Lehman), or they were saved by states through loans and debts causing increased taxes and social pressure. Especially when we want to keep meeting our physical needs (food, shelter, healthcare, mobility) in a sustainable way, we should prevent that organisations on key positions within that economic system become too big to fail. Because that is a system, we have learned, is not future proof.

2. Resource bubble

One of the many assumptions is that the Circular Economy is about the preservation of resource value within the economy. Sharing, reuse, refurbishing and upcycling are all important ingredients to extend life span and keep that value within our economy. To achieve this, we are constantly developing new technological processes to recycle old materials to new ones with even better properties. But while we are doing this, we learn that some man-made materials are not that good or useful as initially expected. Asbestos, CFS’s, once technological highlights that are now causing health and environmental problems. Large investment have to be made to remove these materials from production methods and sanitize places where they have been used. The insight that a material may have very negative effects will cause inherent value loss even though the materials may be recycled rather easily. This value loss can be a result of the harmful effects that materials may cause on the long run, but also because materials slowly leak away into nature or because reuse or recycling is just technically impossible on the long run.

Since we are developing more and more synthetic materials every year, the chance increases that there will be materials that cause problems on the long term. Some of these, initially highly valuable materials, will need to be depreciated prematurely resulting in big financial losses. With that in mind, if more materials will emerge that need to be prematurely depreciated but companies await hopefully for new technological advancement, a resource bubble will be created with an increased risk of bursting and huge effects for the economy.

3. Ecological poverty

Currently we are still mining more resources from nature (the ecology) than that same ecology can “produce” and regenerate. Next tot that we try to keep these materials as long as possible within our economy. Because resources often leave the economy through influence of ecological mechanisms such as corrosion and decomposition, the value starts to decrease. Various organisation state that the Circular Economy aims for increasing the time that materials stay within the economy. This process of retrieving more materials from the ecology than it can produce and keeping them as long as possible in the economy prevents the ecology to make use of these materials for its own mechanisms and keep its cycle going. This may result in ecological poverty.

An example is the top-soil depletion that is currently occurring all around the world. Because we use more and more land for economic activities, room for plants and animals that keep the soil “alive” and fertile is decreasing. Next to that, mown grass, fallen leaves and remnants of harvested crops are removed and used as cattle feed or for generating bio-energy. This way important nutrients within this “waste” is taken out of the biological cycle causing top-soil to slowly deplete.

4. Shifts of power

One of the reasons to move towards a circular economy is the increasing resource scarcity. We simply want stable prices and we want to be independent of unreliable partners. New business models are being developed to avoid these problems. One of these models is about companies organising their own resource bank. By keeping resources under management of a single party, while they are flowing throughout the supply chain, allows the resource price to be removed from every transaction. This can be achieved because the chain manager stays owner of the material and asks other chain partners for a service instead of a product. For example, in Germany there are various energy network operators that do not sell their waste or other materials leaving their operations, but lease these resources to disassemble and smelt them according to various specifications. Meanwhile the material stays in the possession of those network operators. The company smelting the metals has become a service company instead of a company that needs to buy its feedstock and sell high quality metal. The network operators then ask a cable factory to make new cables from their recycled metals. This way, the chain managers  keep ownership and control over the flow of resources.

Because a single party within the supply chain becomes owner of the resources, a shift in dependency may occur. Currently all parties in that supply chain are interdependent of each other. In various circular economic business models, they become dependent of a single party that manages the resources. That party controls who has access to those resources and who does not. A form of power of which we cannot foresee all socially and economic effects.

Fair enough…

The risks that may occur are predicted extrapolations of the current ideas and implementations of the circular economy. The problem here is that the actual definition and principles of the circular economy are still ill-defined. That increases the uncertainty on the chance that these risks may occur. However the same goes for all opportunities that many write about. But to have a fair discussion on the risks we should at least start talking about them and not only preach about the beautiful opportunities that the Circular Economy may bring about. It is important that we start to talk the same language.

Especially when we speak about systems and transitions that affect and are expected to secure our future welfare. As it affects us all, we should be able to discuss and question these ideas and concept openly and publicly. One issue that often occurs, is that new concepts or business models are blindly accepted as holy grail and repeated over and over again. Above all, those who make their money on the Circular Economy and spread the word should also be more outspoken about the possible disadvantages. The need for an improved economic system in which we move away from a take-make-waste principle is crystal clear for many. The time has come to have a fair discussion.

Grondstoffen Hiërarchie

Resource Hierarchy Explained