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Circular Economy An Introduction Astrid Severin & Katharina Krell Varna, Bulgaria 11 th September 2014.

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Presentation on theme: "Circular Economy An Introduction Astrid Severin & Katharina Krell Varna, Bulgaria 11 th September 2014."— Presentation transcript:

1 Circular Economy An Introduction Astrid Severin & Katharina Krell Varna, Bulgaria 11 th September 2014

2 The Linear Economy 11th Sept Current economic model of ‘Take-Make-Dispose’ World as unlimited resource and waste bin; 65 billion tonnes of raw materials enter the economic system, p.a.; Around 60% of waste ends up in landfill…

3 Limits to the Linear Economy 3 Rising prices for materials and energy; Supplies of precious materials running low; Environmental damage from resource extraction, landfilling and waste disposal; Improving efficiency offers only short term gains. 11th Sept 2014

4 Impact on Companies Natural resources make up % of costs for the average manufacturing company; Labour costs are falling as a percentage of total costs, whilst materials and energy costs rise; Small Business Act (2010) estimates that better resource use could save European industry €630billion; 411th Sept 2014

5 What is the Circular Economy? “A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life.” ~ Waste & Resource Action Programme – UK (WRAP) 511th Sept 2014

6 Circular Economy Concepts Improved efficiency will not solve the problem of finite resources – a full system change is needed. McDonough & Braungart (2002) - two types of material flows in a circular economy: Biological (‘consumable’) Materials – Re-enter the biosphere to build natural capital; Technical (‘durable’) Materials – High quality, high added-value. Designed to circulate and not enter biosphere. 611th Sept 2014

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8 Value Creation 8 Inner Circle – Minimising comparative materials use, through re-use. The tighter the circle, the less it has to be changed to be returned to use (with higher savings) Circling Longer – Maximising the number of consecutive cycles of reuse, to avoid production of a new component 11th Sept 2014

9 Value Creation 9 Cascading – Diversified re-use across the value chain, substituting previously used virgin materials with existing materials (including symbiosis); Pure inputs – Avoidance of contaminated materials to increase collection and re-use efficiency whilst maintaining quality. 11th Sept 2014

10 The Functional Service Economy Closed-loop systems advocate a ‘functional service economy’ in which manufacturers and retailers shift from selling products to services. Products are designed for a cycle of disassembly and re-use. Companies maintain ownership of products and act as a service provider. Such a model promotes: More durable products – longer life-span = lower demand for energy and materials; Disassembly and refurnishing – rather than disposal; New economic opportunities – through product and service shifts. 1011th Sept 2014

11 Mudjeans (NL) -Jeans rental – returned to be re-used once worn out; -Old jeans recycled into new denim, used to make bags or furniture, or re-sold as vintage; -Free repair service during rental period. 11 Business Models 11th Sept 2014

12 Rolls Royce (UK) -Power by the Hour (PBH) model for aircraft engines – performance based contracting that shares risks between supplier and contractor; -Provides airlines with engine and fixed cost maintenance over a period of time; -Users are guaranteed a set maintenance costs; Suppliers encouraged to improve efficiency and quality. 12 Business Models 11th Sept 2014

13 Les Petits Riens (BE) -Social enterprise – businesses run to fund social actions against poverty and social exclusion; -Collects clothing, furniture, and other second hand objects; -Upcycling of old objects to be re-sold. 13 Business Models 11th Sept 2014

14 What is the Circular Economy? 14 YouTube 11th Sept 2014

15 COM(2014)398 – Communication: ‘Towards a circular economy: A zero waste programme for Europe’ –Sets out how to establish a framework to promote the circular economy; –Communication sets out how to move the EU towards a zero-waste economy: New innovations in markets for recycled materials; New business models; Eco-design, and Industrial Symbiosis –Combination of smart regulation, market-based instruments, incentives, information exchange, support for voluntary processes. 15 Circular Economy Communication 11th Sept 2014

16 Circular Economy Communication Enabling Policy Framework 1.Designing and innovating for a circular economy; 2.Unlocking investment in circular economy solutions; 3.Harnessing action by business and consumers and supporting SMEs. Modernising Waste Policy: Waste as a Resource 1.Defining waste targets for a move to a recycling society 2.Delivering simplification and better implementation of waste legislation; 3.Tackling specific waste challenges. Setting a resource efficiency target - Proposed target for 30% resource efficiency improvement in review of Europe 2020 strategy. 1611th Sept 2014

17 Waste is an economic opportunity, if collected and treated correctly; Treatment options other than landfilling: –Recycling; –Biological reprocessing (organic waste); –Energy recovery (pyrolysis or gasification); –Incineration. Recognition that waste is a resource accounts for shift towards greater recycling and recovery. 17 Waste as a Resource 11th Sept 2014

18 Hierarchy informs and shapes EU waste policy; Waste hierarchy sets out most favourable to least favourable options for waste management; Reduction and reuse are most favoured options – fitting for the circular economy. 18 The Waste Hierarchy 11th Sept 2014

19 19 EU Waste Policy The EU encourages reduction of landfilling and better use of waste resources: 1999 – Landfill Directive (1999); Waste Incineration Directive (2000); Waste Framework Directive (2008) EU legal instruments prioritise waste prevention and decoupling of economic growth from waste generation 11th Sept 2014

20 Municipal waste generated (kg/capita) 2011th Sept 2014

21 Municipal waste treatment in

22 22 Municipal waste treatment in 2011 Landfilled Incinerated Recycled + Composted 11th Sept 2014

23 Commission proposal on 2030 recycling targets: –Increase recycling and re-use of municipal waste to 70% by 2030; –Increase re-use or recycling of packaging waste to 80% by 2030 (with material specific targets of 90% for paper, 60% for plastics, 80% for wood and 90% for ferrous metals, aluminium and glass); –Phase out landfilling of recyclable waste by 2025; –Reduce food waste generation by 30%, and; –Increase the cost-effectiveness of Extended Producer Responsibility schemes. The Commission estimates 580,000 new jobs could be created through meeting these targets. 23 Recycling Targets 11th Sept 2014

24 The Case for the Circular Economy Growing world population and new middle-class consumers in developing world will further increase resource use and costs; Circular model generates wealth and employment by creating more value from a single unit of a resource than traditional linear model; Re-use of materials makes good economic sense for companies when resource prices are rising; Technological enablers – including IT and Communications – are emerging (‘Internet of Everything’); Consumer preferences are moving to ‘Access over Ownership’ / On Demand models; Governments noticing that resource policy is potent industrial policy – stimulus and support available. 2411th Sept 2014

25 Supporting the Circular Economy Measures include: Increasing the time products deliver their service before coming to the end of their useful life (durability); Reducing the use of materials that are hazardous or difficult to recycle (substitution); Creating markets for recycled materials (standards, public procurement); Designing products that are easier to repair, upgrade, remanufacture of recycle (eco-design); 2511th Sept 2014

26 Supporting the Circular Economy Incentivising waste reduction and high-quality separation by consumers; Minimising costs of recycling and reuse with separation and collection systems; Facilitating industrial clusters that exchange by-products to prevent them from becoming wastes (industrial symbiosis); Encouraging wider consumer choice through renting or leasing instead of owning products (new business models). 2611th Sept 2014

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