The circular economy: the natural progression?

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Technology is the key in moving from the traditional, linear economy to the circular economy.

The volatility and unpredictability currently faced by the global economy calls for a sustainable economic model that aims to keep products, components and materials at their highest utility and value at all times – the circular economy.

As resources grow more scarce the traditional linear economy has reached it limit.

The unsustainable economic model’s key characteristic is a system of resource consumption, a ‘take-make-dispose’ pattern: 65 billion tonnes of raw materials entered the economic system in 2010, with this set to rise to 82 billion tonnes by 2020.

It is a wasteful and expensive system, although significant efforts have been made to improve resource efficiency and explore new forms of energy.

“This process is unsustainable,” George Brasher, MD for HP UK, told Information Age, “and we are working to create an alternative. The circular economy is regenerative by intention, using designs that continually recover and reuse materials”.

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The circular economy focuses on restoration, with a shift towards renewable resources, with the aim of reducing waste.

Products are built and designed for a cycle of disassembly and reuse.

It is our responsibility, said Brasher, to instigate the move to the circular economy.

Transitioning from the linear to the circular economy using technology

The key is identifying the ways to increase material productivity in a sustainable manner.

Felix Faulhaber, chief innovation/supply chain officer at Rubicon Global, aptly writes: “To create a more sustainable circular economy, we as an industry must use technology to evolve, and enable businesses to fulfill an old maxim: turning one man’s trash into someone else’s treasure.”

The Ellen McArthur Foundation (EMF) embraces this ambition by fronting the circular economy 100, partnered by HP among others.

The EMF is a global platform of 100 leading companies and innovators working to accelerate the transition to a circular economy.

Clearly, the desire is there, and the benefits recognised.

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Technology can be used to ease the transition process, and help reap the rewards once the transition is complete.

3D printing solutions is the obvious example.

3D printing enables companies to be more efficient, the technology removes the need to hold large spare parts inventories and can reduce supply chain complexity.

Products are specifically designed to be repaired, upgraded and maintained. In effect, Brasher commented, 3D printers are making themselves, as well as the product.

“Right now the parts you can make yourself are 0,” Brasher remarked, but the aim that HP are helping pioneer is to commercialise 3D printing so that businesses, like local manufacturers, can make their own parts.

This will lead to lower warehouse costs, and the amount of waste being created.

In effect businesses could build what, and exactly how much they need, which will reduce costs.

Environmentally it is also beneficial, as 3D printing could reduce carbon footprints for both business and workers and could result in a 5% decrease in energy and CO2 emissions from industrial manufacturing by 2020.

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The emergence of the Internet of Things (IoT) could also give businesses the opportunity to transition to the circular economy, by optimising the power of connectivity.

It has far reaching applications for embracing the circular economy, as Cisco suggests: “IoT supports the transition to a circular economy, with new connected devices enabling the tracking of products, components and materials for re-use and recovery; new business models through greater connection with customers; and more effective reverse logistics chains.”

Linear and circular collaboration

A smooth transition from linear to circular requires sources of value creation that appeal to the linear economic model in terms of product design and material usage.

The process must be gradual, allowing businesses time to embrace the system, and innovate new ideas to maximise growth, savings, and reduction in waste.

But, once implemented, the financial benefits will present themselves, as EMF’s case study analyses of subset of EU manufacturing sectors suggests.

It found an annual net material cost savings of up to $380 billion in a transition scenario, with up to $630 billion in an advanced scenario, while studying a subset of EU manufacturing sectors.

But does the circular economy have any substance to back it up?

There are already examples of the circular economy in modern businesses, from biodegradable food packaging to pay-per-use contracts for tyres and other similar products.

Brasher referred to HP’s ‘instant ink’ scheme, where the business printer uses the internet to let HP when to send more ink.

Instead of buying ink cartridges, using them and throwing them away, the Internet of Things is used to track how much ink is used, and when you’re low a new ink cartridge is sent with a recycling bag that is brought back to HP for reuse.

Similarly, businesses like Hello Fresh fit this model. It delivers the exact amount of ingredients necessary for a meal, with no waste.

The transition to the circular economic model is beginning within some businesses.

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Equally, there are businesses models that haven’t adopted a circular ethos, but could.

An analysis from the EMF did provide current examples of industries that could benefit from switching to the circular economy.

The cost of remanufacturing mobile phones could be reduced by 50% if the industry made phones easier to take apart, improved the reverse cycle and gave incentives to return old phones.

High-end washing machines, along with other similar appliances, would be accessible for most households if they were leased instead of sold.

The UK could save $1.1 billion a year on landfill costs by using organic food as an energy source. This would reduce greenhouse gas emissions by 7.4 million tonnes per year and could deliver up to 2 GWh of electricity.

The report suggests with slight tweaks to current business models the circular economy can take effect, and yield significant material productivity, while yielding greater profits for the manufacturer.

These tweaks could be implemented by improvements in material selection and product design, innovative business models, and establishing cost-effective collection and treatment systems.

A leap of faith?

These ideas are all sound in practice, but the report admits that ‘this remains a rough chart of the potential for the circular economy.’

Shifting from one economic system to another will be challenging to say the least.

>See also: How the Internet of Things is changing business models

Companies like HP have been adopting this regenerative circular model for years, and Brasher believes evolutions in technology, citing the Internet of Things, will make the shift easier than expected.

A natural progression

The proposition of a circular economy would reduce operational waste, and benefit the economy through; ‘substantial net material savings, mitigation of volatility and supply risks, positive multipliers, potential employment benefits, reduced externalities, and long-term resilience of the economy,’ according to EMF’s report.

The industrial linear economic system appears to be in decline, and the need to transition to the circular economy is growing,

The move to the circular model is viewed as a natural progression.

Resource availability is in decline, environmental quotas may take its toll, shifts in consumer behaviour, and advances in technology have begun to displace the linear economy ‘naturally’, and may lead to the circular economic evolution.

Source: information-age.com

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