By Dave Gajadhar
CEO, Resultant Group
The earth in undergoing continuous change and as a result we are experiencing a warming trend. We cannot change the climate; however, we can manage and optimize our resources, mitigate waste, emission and contamination.
During this Covid-19 pandemic, the recent issues with reusable plastics and other single use products as an environmental “enemy” was reversed and highlighted to be the barrier required to protect lives from the virus around the world. What is very evident is these products are necessary and fulfills many needs and uses. The problem lies with how we use and discard these products that causes the waste and environmental problems. Our carelessness, laziness and disregard to the immediate environment is the real social and environmental issues not the products that we use and this is again demonstrated globally during the pandemic, where PEOPLE are discarding single use mask, gloves and other PPE in gardens, sidewalks, water ways parks, etc.
I understand that these products have a poor environmental image, at the same time, they provide valuable health benefits. Therefore, it is important that we pay attention to the real issue around these products by informing the general public of their responsibilities and work with manufacturers and policy makers to move them to be more circular and socially acceptable instead of treating it like the enemy.
Plastics did not walk to the beach -a result of careless human actions!
The concept of a Circular Economy (CE) is hot. A growing number of entrepreneurs, policymakers and financiers use this term at every possible occasion, appropriately or not. There are numerous interpretations of what a circular economy is. A widely accepted one is that it is a society in which everything is aimed at using materials and commodities from natural sources as long and as efficiently as possible.
The circular economy is also known as an economic model aimed at creating zero waste and reducing emissions by reducing the amount of energy, natural and raw materials that go into the manufacturing of goods. Reusing resources and optimizing products for multiple uses as much as possible is a key function of circularity, ideally this should be a closed production loop – thus the term ‘circular’.
To date, little progress has been made on the road to a truly circular economy, If anything, the world is becoming less circular. What is really happening? There is typically only one criterion that decides whether the circular economy is a success -does it enhance sustainability?
The circular economy refers to an economic state where resources are kept in a continuous circle of use so that:
- Virgin resources are no longer extracted (e.g. from mining, or extraction from the natural environment)
- Existing products should have multiple uses where they are reused, repurposed or recycled to make new products without loss of value, low energy consumption and near zero emissions
- No resources are disposed of and no value is lost to landfill or incineration.
This approach is in contrasts with the existing ‘take–make–waste’ linear economies seen around the world. Linear economies consume large quantities of raw (virgin) resources to make products, only to dispose of them at the end of their use. This represents a loss of value in terms of the resources that the products contain and the extraction, energy and processes invested in them as we do not have effective mechanisms in place to monetise end of life products.
The linear economy is not the villain, it is responsible for getting us to where we are today and have enabled huge health, social, economic and cultural benefits to humankind. Since industrialisation began, millions have been lifted out of poverty, and we’ve seen substantial increases in the supply of goods and services that people link to quality of life. However, there are two reasons why the linear economy is ultimately at the end of its value life cycle and the time is now to transition to a modernized version of use and reuse:
- The costs of extracting raw materials is rising and access to raw materials in shrinking
- Costs to extract, transport and process is steadily increasing
- Environmental land use impacts reducing the supply and quality of the natural resources it relies upon
- Continuous extraction of resources is now faster and more automated and does not allow time for renewal (example in forestry and fishing).
These actions are leading to scarcity in the supply of resources, and the depletion of these critical resources are impacting industries globally in addition to the, environmental degradation and ever-increasing costs of logistics and manufacturing. All incurred cost is ultimately passed on to consumers who, as a result, increasingly struggle to maintain and improve living standards and quality of life. They will eventually experience a downward spiral in the benefits the linear economy has delivered in the first place, which will accelerate as the world’s population grows. As such, an economic problem becomes a serious geopolitical problem.
Governments are beginning to realize this predicament and in response are promoting a transition towards a more circular economy.
Some forward-thinking organizations have identified the linear economy as a risk to their bottom line and their stakeholders and as such are modernizing their business models to reduce exposure and align with sustainability and environmental compliance policies. However, the challenge is to remain competitive when faced with prevailing economic structures, regulation and standards serving short-term linear business models that continue to result in:
- Unintegrated and unmappable primary and secondary supply chains
- Low-cost instead of quality
- Planned obsolescence, price points
- Consumer perception of quality meaning new
- Negative impacts on the natural world and communities being externalized and not reflected in the cost of products
Nonetheless, success stories are emerging, particularly among entrepreneurial start-ups. Start-up are nimbler and more adaptable, they can do this without the challenges long established organisations face, such as developing and launching new products and services without cannibalising income from existing linear products and services.
The problem remains as the costs of circularity is too high to gain cumulative attraction across most industries.
Transitioning to a circular model in itself begins with a wall of hurdles and the fact that there are many negative externalities tied to the traditional economy, air pollution, water uses and access, remain unpriced. This makes non-circular products cheaper than their circular counterparts and does not level the playing field. This is not an endorsement for government to add taxes to level the playing field. Taxation does not solve economic, industrial and environmental problems! This is because most governments do not allocate the funds as intended.
Circular business models also have higher operational costs. This is partly due to the high costs of compliance, management oversight and reporting on emissions, reuse in design along with higher labor intensity that is required to reuse second-hand products and their components as well as recycle them.
The market for recycled materials is still too small, which adds another layer to the costs model. Take plastic for example. Transactional costs are relatively high because circular-economy businesses have to invest to find usable plastics, collect them, sort them and then recycle them, where as virgin plastic is currently cheaper. (Forbes)
Circular businesses also have a harder time getting traction across the economic and investment circles due to potential higher risks of costs, failure and the lack of a track record. The effect of all this is that many circular products and services can’t compete because they’re too expensive and affordable to a very limited market. This is not fair competition when you are pushing organization to be circular, the playing field must be leveled for adoption and success to circularity.
Let us assume that all hurdles were removed and financing is readily available, circular business models will not always be the preferred solution. As the circular economy, it is not a goal in itself, it’s an effective mean to lower environmental damage and appears best suited to quickly reduce impacts via high volume & frequency of goods consumed that consist of few, homogenous resources, such as food, disposables, packaging, liquids and textiles. On the longer-term gains will be attained for more complex, lower frequency goods such as appliances, furniture, electronics and construction.
We are also seeing at times where other strategies can be more effective and some even conflict with circular strategies. In the energy sector, energy transition is key in reducing greenhouse gas (GHG) emissions. Electrification and renewable energy are relatively quick wins. However, renewables are not circular and have costly environmental impacts for wind, solar, EV and battery storage. Take cars, everyone is talking the need to make cars more electric. (Electric cars contain a vast amount of fossil fuel manufactured parts including batteries), and at this time we do not have effective means of reusing end of life solar panels, wind turbines parts and batteries. At the same time, if we all switched to electric vehicles immediately, what would we do with all the fossil-fuel cars? The circular economy is all about retaining value in the loop as long as possible. And to do that, you need partners to ensure the circular eco-system works and develops simultaneously to support the transition.
Some regions and countries government has made the circular economy a priority and with good reason. Take for example the construction industry in North America, this sector alone accounts for a high percentage of raw-material consumption (lumber, energy, steel, concrete, transportation) and produces a large quantity of CO2 emissions. In this case, taxing emissions and energy use will only add costs to housing and make it more difficult than it already is to citizens. The impact will be, the need for more government supported social housing and assistance and this is not sustainable. Yet another reason to carefully consider cause and effect before we regulate change.
In theory we can all make things look and feel great – in practice, there are many challenges and invisible costs associated with circularity and change that eventually ends up coming out of the consumer or taxpayer pocket. Yes, there is a price for environmental accountability but that is also at a tipping point and the current tax and spend model is not sustainable.
In the all-in consortium, the pains and gains are shared very well but it requires the partners to be very transparent and share everything. At this time, it is not clear if government and the market is ready to work in a fully transparent model. Therefore, until government and business transition from the current “black box” to a clear “transparent cube” model, circularity and sustainability will remain in the commercial environment only to those who can afford it.
The reality of our current renewable energy infrastructure on Sustainability and circularity!
Today, Wind Turbine Blades and end of life Solar panels cannot be recycled, therefore they are being sent to pile up a few Landfills across North America. Companies are searching for ways to deal with the tens of thousands of blades and panels that have reached the end of their lives.
Built to withstand hurricane-force winds, the blades can’t easily be crushed, recycled or repurposed. That’s created an urgent search for alternatives in places that lack wide-open prairies. In the U.S., they go to the few landfills that accept them and are interred in stacks that are 30 feet deep. Wind and Solar -inconsistent energy supply with huge environmental impacts.
Wind and Solar – inconsistent energy supply with huge environmental impacts.
A wind turbine’s blades vary between 100 to 165 feet long and weighs roughly 6 tons, so at the end of their lifespan they can’t just be hauled away. First, you need to cut through the fiberglass using specialized diamond-encrusted industrial saws to create pieces small enough to fit on tractor trailers and be road legal r-trailer, this costs along with the cost of deconstruction, labor, transportation, tipping , landfill fees and the energy use (emissions) increases exponentially.
Central US landfills are now the final resting place of thousands of blades whose days making renewable energy have come to end and bulldozers bury them out of sight forever in sand. (renewable infrastructure is not circular and as green as they as made out to be) when you look at the fully life cycle and energy produced Vs energy consumed from cradle to grave.
The wind and solar deconstruction trend will continue, as these two renewable energy sources have an average usable life of 18 to 22 years and as a result thousands of aging blades and panels will continue to come down from steel towers around the world and most have nowhere to go but landfills. In the U.S. alone, about 8,000 will be removed in each of the next few years. It is going to get worse as most were built more than a decade ago, when installations were less than a fifth of what they are now. The end of life blades and panels have a huge social, economic and environmental cumulative impact making them non circular or sustainable.
The circular economy principles relationship with an established sustainability approach
There are many business and economic theories to motivate organization to mitigate supply risks, tack leakage and capture value across the operations thereby contributing to a greater bottom line.
Another invisible factor and consideration in the chain is to reduce pollution and improve the consumption of resources as an important part of achieving profitability and circular advantages. Another issue facing industry and various levels of government is what the CE means, the meaning and interpretation of CE varies from one sector to another and from one region to another. For example, consumer goods, textiles, manufacturing, transportation, diary and food industry organisations would certainly recognise the original meaning and motivation of CE. Many of these organisations have been examining and adapting their business models accordingly for well over a decade and have to deal with the inconsistent regulations across multiple jurisdictions.
In the construction industry, the CE concept is now emerging and is associated with sustainability rather than value. Buzz words like ‘circularity’, ‘circular thinking’ and ‘being circular’ are increasingly used instead of ‘sustainability’ to be more social and business friendly and to create a promise of new simpler sounding solutions to old unresolved problems, and these terms , buzz words and concepts adds to and presents other challenges.
Currently there is a lack of clarity and consistency nationally around CE and Sustainability, this then creates a risk and sets up levels of confusion, frustration and costs to industry, it also leads to stagnation and inaction on the path to circularity and sustainability. For organizations to get to a higher level of circularity and sustainability, we must all collaborate transparently and work together to develop enabling regulations and standards across jurisdictions, sot that there is consistency in understanding to act on consistent and relevant standards, changes, guidance, measures and reporting methods in a way that every stakeholder and participant can understand, and not just be told that you must be more circular or sustainable or there will be penalties.
We need to move to more practical solutions and standards for reporting and measurements that matters to the general public and makes practical sense. Designing in reuse at product concept phase with end of life costs assessment including considerations to report against issues like emissions, water scarcity use and reuse, toxicity, contamination, landfill avoidance and resource depletion.
Reusing what already exists, reusing an existing asset, enhances its value and maintains the value of the resources it contains. Reusing an asset clearly avoids the consumption of virgin resources and value-leakage from the asset through the recycling or disposal of the resources. We understand that the reuse of all assets or products is not possible, if is not possible, care should be taken to ensure that end of life products do not cause unintended negative environmental, economic and social consequences.
Design for reuse
Designing for simple disassembly, reuse and repurposing will allow products to be and cheaply disassembled into constituent products at the end of use, ready for the next use. Some products and assets can be surveyed in advance with a view to value-capture at the end of use, where we will be aware of the materials that have potential value and how they need to be disassembled to maintain it with out contamination and be conscious to not to reduce value during repair and refurbishment works.
Design products for reuse and not for waste management
Adaptable design techniques can support several use functions without significant compromises being made to each one. This includes the flexibility for the asset to accommodate different types of use in the same spaces and the flexibility to easily accommodate changes to the original layout.
A durable asset design is one that can provide its intended function over a longer period with low maintenance and repair requirements. An asset that delivers income for longer and with much reduced in-use costs is clearly of superior value to the owner. Durable design involves the careful selection of construction products that can better withstand exposure to physical impact and are less likely to degrade and minimizes exposure to physical impact and causes of degradation.
The integration of existing technologies with emerging industrial and digital technologies can now to leveraged to gather a greater understanding of value as well as a wealth of practical information to support quality decision in close to real time. How data is stored and accessed varies and several systems are available on a web-accessible and updateable database accessed via a QR code or a static record stored on a chip on the product. Product codes could have an unlimited range of data: –E.G.
- Manufacturer details, Installation date, Ownership, Product classification
- Cleaning and maintenance requirements, Certification and standards performance
- Constituent materials, Safety consideration and presence of any hazards
- Potential future uses and disassembly instructions and the list could go on….
And last but not least is the corporate role to circularity Corporate decision-making should integrate differential analysis, environmental and social costs to ensure value and relevance.
A growing number of organisations have sprung to life over the past few years to shine a light on companies’ efforts to behave like good corporate citizens. But while delivering more clarity on corporate behaviour, it is leading to a proliferation of conflicting frameworks, overwhelming some decision makers, managers and staff with sustainability reporting fatigue.
Simultaneously, and also a result of multiple and conflicting reporting frameworks, Investors are increasingly struggling with how best to interpret sometimes contradictory and highly variegated reports and data. The problem was once a lack of data, the challenge now is how best to validate and interpret the data and information being produced. Companies are producing vast amounts of data and at times contribute very little to stakeholders, maybe at time adding more confusion to the mix. From a societal point of view companies must integrate environmental and social considerations into their decision-making so that they create and share value rather than destroy it.
Consistency and transparency are required when creating Business Responsibility Reports. These reports can be used for Business model innovation for sustainability and circularity which is still very much is fragmented. There are dynamic capabilities-based data sets and capabilities in most organizations, yet there is a lack of holistic approaches covering multiple stages of innovation across operations and supply chains. A strong integration across all stakeholder groups, participants, industrial and digital technologies across operation and the supply chain is required to support and enable levels of circularity and sustainability.
The issues we face today, is not much different from the problems faced during the 1930’s and 40’s. The major difference today, we have more data and access to real time information. How we collect, use and value unbiased data will be the key to enabling a successful transition growth and profits during disruptions and unforeseeable events. Making better use of what we already have is a lesson many of us learned from our parents and grandparents, who have lived through tough times, such as the Great Depression, times of drought, shortages, and the energy crisis of the 70s. Resources are scarce in any industry, and driving efficiencies through circular innovation is one of the best ways to glean a competitive edge.
A sustainable circular economy
To achieve a truly sustainable circular economy, consumption and production practices would need to change together. A sustainable circular economy involves designing and promoting products that last and that can be reused, repaired and remanufactured. This retains the functional value of products, rather than just recovering the energy or materials they contain and continuously making products anew. I must point out, although we aim to be 100% circular and sustainable, based on what we know today, we must accept the fact that achieving 100% circularity is a goal and is not attainable any time soon.
New business models, such shared services and closed loop manufacturing based on demand and reusability, repairability and remanufacturing is better option than waste management and recycling. Waste management and recycling, may appear to be circular, in fact it is not sustainable or circular when you factor in energy consumption, efforts and the social, economic and environmental impact of labor and emissions.
How we use resources has transformed our economy and society. Levels of circularity and reuse models offers us a chance to deliver sustainable and profitable benefits in the long term. Let’s not waste it. Stay up to date by subscribing to our newsletter and publications. www.resultantgroup.com
Stay tuned for one of our regional workshops coming this fall.
Time to Shift Our Thinking and Design Out Recycling; Recycling is Not Circular
In today’s society, we are frequently faced with multiple changes, rules, regulations and demands from global sources. At the same time, we endeavor to meet societal and economic demands across the supply chain. This is an era of continuous growth, mass migration, high immigration to developed countries and urban areas, and market-driven high consumption dominated with minimum viable products. Additionally, we have increased land, air and sea travel and logistics contributing to the waste generation cycle. Construction, deconstruction and post-consumer waste are also major contributors.
These factors along with an average 1.8 percent per year population growth rate also have consequences—the demand and exhaustion of natural non-renewable resources and high waste generation. Our current waste generation per capita is now triple what it was in the 1930s and 1940s. As a result of emerging new technologies, there are new looming cumulative issues that will impact recycling: power demands for recycling, electric vehicles, Blockchain, AI, ML, Quantum computing, mobility and automation will put undue strain on renewable technologies and the north American distribution grid. We do not have the capacity to transmit and distribute the forecasted demands for industrial, digital and recycling technologies. So, what are our options? Design out waste, monetize waste at the source, design excess material into feedstock.
We cannot make the same manufacturing mistakes made in the past, such as failing to automate ahead of change and being left behind as job and products are made cheaper overseas with technologies developed in North America. The mechanisms and technologies developed in North America to manage and mitigate waste must be adopted and enabled to support our industries and markets. This will allow use to repurpose, reuse and design in excess material and mitigate the need to high energy and resource-intensive recycling processes.
Consumers are now driving demand and change; consumer waste is created by “lifestyle creep”—the more you earn, the more you waste. Waste and changes in the waste industry include social and economic accountability and environmental compliance. Sustainability includes affordability to everyone not just to those who can afford it. Millions of North Americans live on the very edge and below the poverty line. Adding costs to waste mitigation will compound the waste issues and impact our health and social services programs. The consumer market is also a constantly changing playing field that is costly to organizations if they are not capable to adapt and pivot to meet changing demands. The path to a waste-free future is waste mitigation, by designing out waste at source and monetizing waste where it is created, recycling is a transition method to zero waste.
Dave Gajadhar is an Advisor, Speaker, Educator, and an Advocate for Human prosperity and resource optimization at Resultant Group (Edmonton, AB), business modernization, resource optimization and transition advisors. He can be reached at (780) 483-4800, e-mail Dgajadhar@ResultantGroup.com or contact through Twitter: @dgajadar.
Resultant Group helps companies to identify what matters to each of your stakeholders, participants and clients across your value chain. This enables your organization to optimize resources, monetize excess material and enable your sustainability reporting to convey the business’ unique story reflecting how your business is genuinely managed in a shared and circular economy. Join us at one of our regional workshops. Check out our schedule online at Resultantgroup.com and Companiesforzerowaste.com. Visit @ResultantGroup to learn more about advisory master classes.