The circular economy is a generic term which refers to no waste and no pollution by design or intention, which aims to keep products, components and materials at their highest utility and value at all times against the today’s Linear Economy which is a “take, make and dispose” model of production.
We can think of our world like a washing machine because we waste 90% of our raw materials. In the current economic model, big companies are able to re-sell half of their waste, but the others cannot. We dispose 80% of our all goods we make within the first six months of their life and at this point, circular economy model helps us changing the way we design, produce and use that washing machine. In other words, we waste nothing anywhere every man-made materials or biodegradable parts are available. Welcome to a new Smart City world of the 4th industrial revolution which has no garbage, no pollution and a solid foundation for a circular economic model to make today’s products tomorrows’ resources.
To sum up, this is a new system which allows companies to look after their products at each step. Circular Economy starts with a conception to generate minimum waste, to facilitate disassembling and to encourage more than simple re-cycling.
All production phases and logistics are run by renewable energy resources. When products expire, their biodegradable parts are decomposed in nature and the remaining pieces are returned to the manufacturers to be upcycled. All those process contributes significantly into the both of saving on raw material costs and waste management costs. According to the researches, Europe can save €600 billion through circular economy along with reducing carbon emissions.
Let’s give a few examples to make it simpler;
Entrerra Feed Corporation – Resource Recovery
Enterra Feed Corporation is a Canadian start-up founded in 2007 with a disruptive vision to transform the aquaculture and organic disposal industries. Enterra diverts recycled food products and converts them into ingredients for food production. Rising global demand for fish and poultry put a pressure on food inputs and costs, but the primary concerns of the company founders start with the depletion of wild fish stocks and their use as aquaculture feed. According to the statistics, 30% of world’s food supply is sent to disposal and composting with considerable loss of complex food nutrients. Enterra Feed Corporation addresses both issues by up-cycling waste food to grow sustainable protein, oil and natural fertilizer products for use in food production. The company accepts organic waste from farmers, grocery stores and food producers in Metro Vancouver and the Fraser Valley. It feeds the larvae of a local beneficial insect (Black Soldier Fly – BSF) with those waste food (feedstock), primarily fruit and vegetable discards. Then, the larvae are harvested and processed into ingredients for fish, poultry, pets and zoo animals as an excellent source of protein and fat, which substitutes for costly and resource-intensive ingredients such as fishmeal, poultry meal and soybean meal. Its natural process also creates an organic fertilizer which can replace chemical fertilizers. An innovative start-up gives us a great answer about how a simple resource recovery can be achieved in a circular smart city economy.Phillips – Product as a Service
In 2009, an architectural agency named as Rau Architects specialized in sustainable building designs approached to Philips -consumer lifestyle, healthcare and the world’s largest lighting supplier company-to address a need of upgrade their lighting at its Amsterdam office, but it did not want to buy expensive lighting infrastructures such as lamps, luminaries, cables, control panels etc. which are exposed to eventually replacement and disposal. The company management wanted to know exact amount of proper lighting which does not demotivate their employees in their offices and work spaces, but nothing more. In this regard, Rau and Philips started a co-creation process to design an intelligent lighting system maximizing natural sunlight and a responsive & adapting lighting system working through sensors and control panels. As a result of this innovation, Philips started developed a commercially successful business model with significant environmental and financial benefits for customers. Since 2010, Rau Architects does only pay for the actual amount of light consumed (lux), not for the equipments or raw materials used in the infrastructure. By shifting from one-time transactions to relationships via pay-per-lux model, Philips maintains the ownership of the materials while Rau pays for only maintenance and servicing with the option to upgrade the setup. By using this LED lamp leasing model, Rau saved more than 35% on energy. In the second phase of the project, Philips implemented smart energy meters to give further information about the energy consumptions per space. This monitoring and optimization process saved another 20%, amounting to 55% saving in total.
This business model allows customers to get the full advantage of newest lighting technologies and reduce operational costs. At the end of service period, lighting materials are returned to the company to be repaired, or partially or fully recycled.
Instead of selling the products, Philips envisions a future where it retains ownership so it can optimize the resources, encourage multiple re-use and eventually get the benefits of recycling. This circular resource activity promotes the benefits of products as a service by shifting incentives of durability and upgradability from volume to performance.
According to the analysis of the world’s prominent advisory firm Accenture, there are five new business models which generate resource productivity improvements in innovative ways in a circular economy;
I. Circular supplies: Provides fully renewable, recyclable or biodegradable resource inputs that underpin circular production and consumption systems,
II. Resources recovery: Enables a company to eliminate material leakage and maximize the economic value of product return flows,
III. Product life extension: Allows companies to extend the lifecycle of products and assets. Value that would otherwise be lost through wasted materials are instead maintained or even improved by repairing, upgrading, remanufacturing or remarketing products,
IV. Sharing platforms: Promotes a platform for collaboration among product users, either individuals or organizations,
V. Product as a service: Provides an alternative to the traditional model of “buy and own.” Products are used by one or many customers through a lease or pay-for-use arrangement.
A circular economy can provide us new age sustainable growth models and a brighter future through disruptive technologies and business models based on longevity, renewability, reuse, repair, upgrade, refurbishment, capacity sharing and dematerialization.
Only thing we need to do is to take a new path instead of following the linear one and to discuss a new circular economic model inspired by the mother-nature which does not leave any waste.
According to joint report of OECD & FAO (Food & Agriculture Organization of the United Nations), global poultry production arrived at 111 million metric tonnes in 2015 and poultry meat will capture more than half of the world’s share of additional meat produced by 2024. As for aquaculture and fisheries, they have a significant role in eliminating hunger, promoting health and reducing poverty. In 2010, fish accounted for 16.7% of the global population’s intake of animal protein and 6.5% of all protein consumed. Moreover, fish provided more than 2.9 billion people with almost 20 percent of their intake of animal protein, and 4.3 billion people with about 15 percent of such protein.
Re-thinking Progress: The Circular Economy, “Ellen MacArthur Foundation”
- Circular Economy, “Ellen Macarthur Foundation”
- Cradle to cradle: Powering Europe’s circular economy, “Euronews.com”
- Dongusel bir ekonomi mumkun, “Yesilist.com”
- Case study, “Enterra Feed Corporation”
- Case studies , “National Zero Waste Council”
- Five projections for global poultry production “wattagnet.com”
- OECD – FAO Agricultural Outlook, 2015-2024
- The state of world fisheries and aquaculture, FAO, 2014
- Circular Economy of Philips, “Philips.com”
- Philips explores feasibility of ‘selling light’ as service-based model, “Edie.net”
- Circular advantage “Accenture”