This is a crucial time for the future of the EU’s policies on the
circular economy . Last month, the European Commission
withdrew a circular economy package that promised to create 2
million jobs, around €600 billion in net savings and 1% growth in
GDP. The package encompassed a set of bills on landfilling,
recycling and incineration for vehicles and batteries, electronics
and packaging. At the time, Frans Timmermans, the
commission’s first vice-president, said the purpose was to
develop a much more aspirational package. It’s not clear
whether there will in fact be a more ambitious package, but it
seems a good time to think about the size of the opportunity for
the circular economy and what it would take to implement the
system.
The current linear “take-make-dispose” economy relies heavily
on cheap and readily available resources. However, commodity
prices are expected to continue to rise over the long term,
volatility is increasing dramatically and supply is becoming more
and more uncertain. On top of that, with 3 billion additional
consumers expected to enter the middle classes by 2030,
demand will almost certainly rise.
The concept of the circular economy helps decouple resource
constraint from growth. Many leaders in business, technology,
design and policy already embrace this new approach. A shift to
the circular economy could save $1 trillion in materials each year
by 2025 and prevent 100 million tonnes of waste globally. This is
a rare opportunity where economics and profitability meet
sustainability.
There are already examples of the circular economy in motion,
which we can learn from and use as a model for future efforts:
1. Plastics : Annual material demand for PET and
polyester totals about 54 million tonnes, of which
roughly 86% (around 46 million tonnes) leaks out of
the system. Meanwhile, around $2.7 trillion worth
of packaging materials is lost in the consumer
goods value chain every year. Moving towards
greater circularity could generate value on a large
scale.
A huge step forward in the recycling of plastics was taken in
1988, when the resin identification coding system was
introduced. The system clearly identifies polymer types, allowing
for the effective separation of polymers and thus the recycling of
pure polymer streams. It has been instrumental in the setting up
of PET collection and recycling units. The coding system serves
as a good indicator of how private-sector alliances and trade
associations can shape the circular economy.
2. Paper and paperboard : Total annual production of
paper and paperboard will amount to around 480
million tonnes by 2020. Some 27% – roughly 130
million tonnes – of this total leaks out of the
system, presenting opportunities for improvement
(83% of this leakage is a result of poor collection
rates in countries). Addressing the leakages could
save around $10 billion.
To better boost the recycling rate and quality of recycled paper,
Ecofolio, a French state-accredited non-profit organization, uses
a system that rewards good behaviour and penalizes those
organizations not making enough effort to recycle. Now, 67% of
France’s paper-related industries work together with Ecofolio to
design paper products that are more environmentally friendly.
3. Asset tracking: Each year, around $390 billion
worth of consumer electronics and household
appliances reach end of life. In 2012, consumer
electronics were responsible for almost 50 million
tonnes of e-waste. By providing information on
assets and components throughout the entire
lifecycle, up to the point currently defined as “end
of life”, asset tracking could extend the lifespan of
these products, and could encourage reuse,
remanufacturing and recycling. This could save
$52 billion annually in the household appliances
sector alone.
The airline industry provides valuable lessons for asset tracking.
Rolls Royce introduced their “power-by-the-hour” concept as
early as 1962, charging airlines a fixed fee per flight hour of their
turbines to cover engine and accessory replacements. This
meant they were paying only for the use of the engines, not for
downtime. In 2002, the company introduced “Rolls-Royce
CorporateCare”, which includes in-flight monitoring of engine
health using onboard sensors. In addition, it schedules
preventative maintenance and engine replacements at times
least disruptive to airplane operators. The generated dataset can
improve management of spare parts and the reuse/
refurbishment of components.
While the concept of the circular economy is already gaining
global interest, to successfully transition to a circular economy,
we will need everyone – the private and public sectors, as well as
all parts of the value chain across all industries – to be involved,
to push for regulatory change, investments in new business
models and innovations, as well as advances in information
technology. Project Mainstream, which focuses on the three
opportunities above, is an example of the impact that can be
achieved by this type of collaboration. Furthermore, in order to
drive transformation on a large scale, it is critical to first
demonstrate that the circular economy can work in both theory
and practice.
Cross-industry collaboration allows players from different
industries that use the same material to address the stalemate
together, and cross-supply chain collaboration makes it easier to
identify the areas where we can save money and resources.
Once the proof of concept is established, the circular economy
can legitimately become the new model of growth. Companies
will then be able to replicate these successful examples and
begin the transition to a new paradigm.
circular economy . Last month, the European Commission
withdrew a circular economy package that promised to create 2
million jobs, around €600 billion in net savings and 1% growth in
GDP. The package encompassed a set of bills on landfilling,
recycling and incineration for vehicles and batteries, electronics
and packaging. At the time, Frans Timmermans, the
commission’s first vice-president, said the purpose was to
develop a much more aspirational package. It’s not clear
whether there will in fact be a more ambitious package, but it
seems a good time to think about the size of the opportunity for
the circular economy and what it would take to implement the
system.
The current linear “take-make-dispose” economy relies heavily
on cheap and readily available resources. However, commodity
prices are expected to continue to rise over the long term,
volatility is increasing dramatically and supply is becoming more
and more uncertain. On top of that, with 3 billion additional
consumers expected to enter the middle classes by 2030,
demand will almost certainly rise.
The concept of the circular economy helps decouple resource
constraint from growth. Many leaders in business, technology,
design and policy already embrace this new approach. A shift to
the circular economy could save $1 trillion in materials each year
by 2025 and prevent 100 million tonnes of waste globally. This is
a rare opportunity where economics and profitability meet
sustainability.
There are already examples of the circular economy in motion,
which we can learn from and use as a model for future efforts:
1. Plastics : Annual material demand for PET and
polyester totals about 54 million tonnes, of which
roughly 86% (around 46 million tonnes) leaks out of
the system. Meanwhile, around $2.7 trillion worth
of packaging materials is lost in the consumer
goods value chain every year. Moving towards
greater circularity could generate value on a large
scale.
A huge step forward in the recycling of plastics was taken in
1988, when the resin identification coding system was
introduced. The system clearly identifies polymer types, allowing
for the effective separation of polymers and thus the recycling of
pure polymer streams. It has been instrumental in the setting up
of PET collection and recycling units. The coding system serves
as a good indicator of how private-sector alliances and trade
associations can shape the circular economy.
2. Paper and paperboard : Total annual production of
paper and paperboard will amount to around 480
million tonnes by 2020. Some 27% – roughly 130
million tonnes – of this total leaks out of the
system, presenting opportunities for improvement
(83% of this leakage is a result of poor collection
rates in countries). Addressing the leakages could
save around $10 billion.
To better boost the recycling rate and quality of recycled paper,
Ecofolio, a French state-accredited non-profit organization, uses
a system that rewards good behaviour and penalizes those
organizations not making enough effort to recycle. Now, 67% of
France’s paper-related industries work together with Ecofolio to
design paper products that are more environmentally friendly.
3. Asset tracking: Each year, around $390 billion
worth of consumer electronics and household
appliances reach end of life. In 2012, consumer
electronics were responsible for almost 50 million
tonnes of e-waste. By providing information on
assets and components throughout the entire
lifecycle, up to the point currently defined as “end
of life”, asset tracking could extend the lifespan of
these products, and could encourage reuse,
remanufacturing and recycling. This could save
$52 billion annually in the household appliances
sector alone.
The airline industry provides valuable lessons for asset tracking.
Rolls Royce introduced their “power-by-the-hour” concept as
early as 1962, charging airlines a fixed fee per flight hour of their
turbines to cover engine and accessory replacements. This
meant they were paying only for the use of the engines, not for
downtime. In 2002, the company introduced “Rolls-Royce
CorporateCare”, which includes in-flight monitoring of engine
health using onboard sensors. In addition, it schedules
preventative maintenance and engine replacements at times
least disruptive to airplane operators. The generated dataset can
improve management of spare parts and the reuse/
refurbishment of components.
While the concept of the circular economy is already gaining
global interest, to successfully transition to a circular economy,
we will need everyone – the private and public sectors, as well as
all parts of the value chain across all industries – to be involved,
to push for regulatory change, investments in new business
models and innovations, as well as advances in information
technology. Project Mainstream, which focuses on the three
opportunities above, is an example of the impact that can be
achieved by this type of collaboration. Furthermore, in order to
drive transformation on a large scale, it is critical to first
demonstrate that the circular economy can work in both theory
and practice.
Cross-industry collaboration allows players from different
industries that use the same material to address the stalemate
together, and cross-supply chain collaboration makes it easier to
identify the areas where we can save money and resources.
Once the proof of concept is established, the circular economy
can legitimately become the new model of growth. Companies
will then be able to replicate these successful examples and
begin the transition to a new paradigm.
No comments:
Post a Comment